“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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