“With Barack Obama, you got the sense that he blinked the minute he walked in the room, and gave the Republicans what they wanted,” said syndicated columnist Mark Shields on PBS’s weekly “Shields and Brooks” program aired last Friday.
The two biggest sticking points on the deal are a $91 billion tax cut extension of two years for high-income households, and a $23 billion dollar estate tax cut, both policies that a majority of economists say will have no effect on improving the economy, and instead will add to the deficit.
The inclusion of these two provisions has made a lot of Democrats furious, and according to Shields, made a lot of Republicans “secretly gleeful.”
In his own defense, Obama said in a press conference the day after the deal was announced: “Well, let me say that on the Republican side, this is their holy grail, these tax cuts for the wealthy. This is—seems to be their central economic doctrine.”
Obama said that he was aware that he had the support of the American people to say no to tax cuts for the wealthy, but he could not budge the Republican leadership, namely Senate Minority Leader Mitch McConnell (R-Ky.) and House Republican Leader John Boehner (R-Ohio).
“And if I have to choose between having a protracted political battle on the one hand, but those folks being hurt or helping those folks and continuing to fight this political battle over the next two years, I will choose the latter,” said the president, adding that if the tax cuts for the wealthy were made permanent, that would be unacceptable. The agreement is to extend the tax cuts for two years.
In the end, Obama got a better deal than most were expecting, notably a payroll tax holiday, said by economists to be the single most effective option available to stimulate the economy. A payroll tax holiday was suggested by the president’s bipartisan debt reduction Bowles-Simpson commission, as well other debt reduction plans.
The president also won an extension of unemployment insurance ($56 billion), child tax credit ($20 billion), earned income tax credit ($7 billion), American opportunity tax credit ($18 billion), a 100 percent rebate for business investments in 2011 ($22 billion), and the continuation of renewable energy grants started under the Recovery Act ($3 billion).
But after the agreement was announced, the administration faced a litany of anger from Democratic ranks, especially from House Democrats, who had been effectively shut out of the negotiation process. Even now it is unclear whether they will agree to support the deal, while the Senate is expected to pass it easily.
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In response to the outrage, the White House launched a press offensive to show support for the deal. The deal was announced Dec. 7. From Dec. 8 to 12, the White House released about 50 statements from six democratic senators, 11 congressmen, 10 governors, three governors-elect, and 22 mayors, including the mayor of L.A. and the governor-elect of New York state. A couple of Republican mayors weighed in also, including Mayor Ashley Swearengin of Fresno, Calif., and Mayor Robert Cluck of Arlington, Texas.
On Thursday, Dec. 9, the White House released a summary of statements from economists in support of the package. White House Press Secretary Robert Gibbs admitted that the administration’s top negotiators on the deal, Jack Lew, director of the Office of Management and Budget, and Treasury Secretary Timothy Geithner met members of the fiscal commission to review the deal, a move that would have appeased members of Congress concerned about the $900 billion dollar price tag adding to the deficit.
Vice President Joe Biden also got into the act with an e-mail targeted at ordinary Americans emphasizing direct benefits, such as “money in your pocket through a reduction in the payroll tax.” The e-mail, with the subject heading “Here’s the Deal,” included a video explaining the package in easy to understand terms.
“That’s the deal, folks, and it’s a good one for America’s middle class,” concludes the e-mail.
On Friday, the White House press corps got a big surprise when Obama brought in former President Bill Clinton to talk to reporters.
After making a “full disclosure” that he would benefit from the tax cuts to the wealthy, he said that doesn’t mean he agrees with them—he doesn’t.
“I can only tell you that my economic analysis is that given all the alternatives that I can imagine actually becoming law, this is the best economic result for America,” said Clinton.
“And I think it is [an] enormous relief for America to think that both parties might vote for something, anything that they could both agree on. And there is no way you can have a compromise without having something in the bill that you don’t like,” he added.
Clinton, of course, has enormous credibility for having helped to forge a bipartisan agreement (after two government shutdowns, and one year of kabuki, as he called it) for a deal that not only reduced a sizable deficit, but created a surplus.
The combined effect of the significant public face that has been put on this deal, as well as the sheer gravity to the economy, and job prospects should the deal fail to go through, seems to be having the intended effect on detractors.
House Majority Leader Steny Hoyer, at a press conference at the National Press Club on Monday, said, “I believe action is necessary and compromise was inevitable.”
With a strong first showing by the Senate on Monday, and a final vote expected to pass Tuesday, House Democrats will meet behind closed doors Tuesday night to discuss a strategy for handling their own vote, the Los Angeles Times reported.
There is a possibility Democrats could add amendments to the Senate bill. If that were to happen, the bill would volley back to the Senate, meet with potential opposition, and then run the risk of allowing the tax cuts to expire before the Christmas break, a scenario nobody wants, especially the American people.
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