Obama Shows Courage on Tax Issue

by John M. Curtis
(310) 204-8700

Copyright December 8, 2010
All Rights Reserved.                                

             President Barack Obama demonstrated he got the message from his Nov. 2 drubbing at the polls, asking him, above all else, to start compromising with his Republican colleagues on Capitol Hill.  Agreeing in principle to extend the Bush-era tax cuts, Barack pivoted away from former House Speaker Nancy Pelosi (D-Calif.) and Sen. Majority Leader Harry Reid (D-Nev.), the exact right direction, since their “good” advice won him low approval ratings and got the Democratic Party into hot water in the midterm elections.  Judging by Democrats’ reaction to Barack’s pivot, they’d take the Party down in 2012.  Barack did exactly the right thing.  He demonstrated he got the message from his Nov. 2 "shellacking" at the polls, asking him, above all else, to work in good faith with his Republican colleagues.  Bipartisanship is what voters asked for on Election Day--and it expect now.

         Agreeing in principle to extend the Bush-era tax cuts, Barack pivoted away from outgoing House Speaker Nancy Pelosi (D-Calif.) and Sen. Majority Leader Harry Reid (D-Nev.), the exact right direction, since their “good” advice won him low approval ratings and got the Democratic Party into trouble in the midterm election.  Judging by Democrats’ reaction to Barack’s pivot, they’d self-destruct in 2012.  Barack did exactly what voters asked him to do on Nov. 2.  No one knows for sure what to do to stimulate today’s sluggish economy and create more jobs.  Most economists, including Federal Reserve Board Chairman Ben. S. Bernanke, agree that more stimulus, by whatever means, is better than no stimulus.  Extending tax cuts to the wealthy, while not Barack’s first preference, is better than handing the GOP a political victory demonstrating more Washington gridlock.

            Barack wished he could have raised tax rates 5% on individuals, families and small businesses earning over $250,000.  Supply-siders cautioned that those same taxpayers need a break to continue growing businesses and adding new jobs.  Democrats would have liked to restore Clinton-era tax rates for the wealthy but, realistically, it’s not the same economy today.  Back then, the stock market was booming, although in bubble-fashion, affording the government more leeway in justifying higher taxes.  Given today’s stubborn sluggish growth, with GDP still an anemic 2.5%, extending the Bush tax cuts for two more years can’t hurt the economy.  Worries about exploding budget deficits, though valid, have to be tempered against the economy’s need for more stimulus.  Democrats can’t have it both ways on tax cuts:  Seeking more government stimulus, and, at the same time, refusing to cut taxes.

            Looking at the bigger picture, Barack must step into his own and do what’s right to govern in a bipartisan way.  Because tax cuts are so critical, essential and indispensable to the GOP, Barack’s compromise proves he willing to govern from the center.  While some see Barack wounded after Nov. 2, he’s, in fact, more empowered than ever to throw off the liberal yoke and govern from the center.  Still at a 46% approval rating, his willingness to play ball with Republicans should win back some disaffected GOP and independent voters.  While the proof’s in the pudding of a growing economy, showing more bipartisanship sets the right tone.  “This is the right thing to do,” said Obama.  “I expect everybody to examine it carefully.  When the do, I think there’re going to feel confident that this is the right course . .  .” urging fellow Democrats to get with the program.

            Pelosi and Reid, and other left-leaning Democrats, have shown poor survival instincts and have lost they’re sway with the White House.  Both should have gracefully stepped aside after the disastrous showing on Nov. 2.  Given that they’re still around, it’s time for them to support Barack’s new bipartisan approach.  “So far the response has not been very good,” said House Speaker Nancy Pelosi, calling the estate tax provision “a bridge too far.”  Pelosi needs to stop the partisan rhetoric and get behind Obama’s attempt to compromise with the GOP.  Barack stands to win either way:  Giving in on tax cuts may not cure the sluggish economy but, at the same time, it shows a willingness to meet Republicans halfway.  More tax stimulus, including reducing the Social Security Payroll tax from 6.2% to 4.2%, puts more cash in workers’ pockets, hopefully translating into more consumer spending.

            Barack’s willingness to compromise with Republicans on extending Bush’s tax cuts is today’s best medicine.  When Obama, Pelosi and Reid rammed health care reform through Congress March 23, he promoted the most bitter partisanship since the Clintons tried to do it in 1993.  While national health care is a worthy goal, it’s not worth it at all costs, especially on alienating crossover Republicans and independents, voting for less partisanship in 2008.   Whatever the consequences of the new tax compromise on budget deficits, it’s worth its weight in gold to show more bipartisanship.  Regardless of what happens to the economy, Barack has less than two years to show he’s a president capable of governing on both sides of the aisle.  He showed real maturity and political courage to finally insist on compromise with the GOP.  Regardless of the naysayers, Barack must stay the course.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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