Barack Obama won the great tax-cut showdown of 2010 – and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years – which just happen to be the two years of the run-up to the next presidential election. This is a defeat?
If Obama had asked for a second stimulus directly, he would have been laughed out of town. Stimulus I was so reviled that the Democrats banished the word from their lexicon throughout the 2010 campaign. And yet, despite a very weak post-election hand, Obama got the Republicans to offer to increase spending and cut taxes by $990 billion over two years – $630 billion of it above and beyond extension of the Bush tax cuts.
No mean achievement. After all, these are the same Republicans who spent 2010 running on limited government and reducing debt. And this budget busting occurs less than a week after the president’s deficit commission had supposedly signaled a new national consensus of austerity and frugality.
Some Republicans are crowing that Stimulus II is the Republican way – mostly tax cuts – rather than the Democrats’ spending orgy of Stimulus I. That’s consolation? This just means that Republicans are two years too late. Stimulus II will still blow another near-$1 trillion hole in the budget.
At great cost that will have to be paid after this newest free lunch, the package will add as much as 1 percent to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012.
Obama is no fool. While getting Republicans to boost his own re-election chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, tea-party, this-time-we’re-serious persona of debt-averse fiscal responsibility.
And he gets all this in return for what? For a mere two-year postponement of a mere 4.6-point increase in marginal tax rates for upper incomes. And an estate tax rate of 35 percent – it jumps insanely from zero to 55 percent on Jan. 1 – that is somewhat lower than what the Democrats wanted.
No, cries the left: Obama violated a sacred principle. A 39.6 percent tax rate versus 35 percent is a principle? “This is the public option debate all over again,” said Obama at his Tuesday news conference. He is right. The left never understood that to nationalize health care there is no need for a public option because Obamacare turns the private insurers into public utilities. The left is similarly clueless on the tax cut deal: In exchange for temporarily forgoing a small rise in upper-income rates, Obama pulled out of a hat a massive new stimulus – what the left has been begging for since the failure of Stimulus I, but was heretofore politically unattainable.
Obama’s public exasperation with this infantile leftism is both perfectly understandable and politically adept. It is his way back to at least the appearance of centrist moderation. The only way he will get a second look from the independents who elected him in 2008 – and abandoned the Democrats in 2010 – is by changing the prevailing (and correct) perception that he is a man of the left.
Hence that news conference attack on what the administration calls the “professional left” for its combination of sanctimony and myopia. It was Obama’s Sister Souljah moment. It had a prickly, irritated sincerity – their ideological stupidity and inability to see the “long game” really do get under Obama’s skin – but a decidedly calculated quality, too. Where, after all, does the left go? Stay home on Election Day 2012? Vote Republican?
No, says the current buzz, the left will instead challenge Obama for the Democratic nomination. Really now? For decades, African-Americans have been this party’s most loyal constituency. They vote 9-1 Democratic through hell and high water, through impeachment and recession, through everything. After four centuries of enduring much, African-Americans finally see one of their own achieve the presidency. And their own party is going to deny him a shot at his own re-election?
Not even Democrats are that stupid. The remaining question is whether they are just stupid enough to not understand – and therefore vote down – the swindle of the year just pulled off by their own president.