Not so long ago, the idea of extending the tax cuts to the wealthy, even temporarily, was out of bounds in the White House. In early September, former Obama budget director Peter Orszag wrote a column in the New York Times suggesting that the president should embrace a short-term extension of the Bush tax cuts for the wealthy. This drew a rebuke from the podium by Press Secretary Robert Gibbs. Treasury Secretary Geithner also spoke against it, arguing that a temporary extension was just a ploy in advance of making the cuts permanent. A couple of months ago, when John Boehner said he would accept a two-year extension, the president accused him of trying to hold the middle class hostage.
Now that Obama has bent a little, must he buckle all the way and accept the GOP position? Not necessarily. By looking open to GOP ideas, moderating his stance on tax breaks for the wealthy, and hosting GOP leaders at the White House, the president appears chastened and accommodating. If a bill comes to the floor of the House and Senate extending the tax cuts for everyone, can Republicans really vote against that simply because they don't like the fact that the tax cuts for the rich will expire? The country is not in love with the GOP. Not taking yes for an answer would be risky.
The problem for the president is the one he had before the election: He might lose Democratic senators like Evan Bayh of Indiana, Ben Nelson of Nebraska, Kent Conrad of North Dakota, or Independent Joe Lieberman of Connecticut, who will vote with Republicans.
Progressive Democrats, meanwhile, are working at cross purposes with the president. They would like a fight. They already think Obama has compromised too much by even entertaining the idea of a limited extension of the tax cut for upper-income families. They've called on House Speaker Nancy Pelosi to block any proposal to do so. Labor leaders are calling for a similar strategy.
Senate Democratic aides say a bill that extended current rates only for the lower brackets would not pass in the Senate. Given that reality, the White House shows no appetite for this kind of symbolic fight, at least right now. The general view is that the president and Republicans will ultimately agree to extend all cuts for a few years. One administration official argues that there will be plenty of time to brawl with Republicans next year. In the meantime, the president wants to remind independent voters that he is closer to the man they voted for in 2008 and that he is at least trying to work with the other side, as they say they want him to.
Two Democratic senators have tried to change the dynamic by offering a compromise approach. Chuck Schumer of New York has suggested increasing the income level for extending the tax cuts from $250,000 to $1 million. The White House and a number of Democratic Senators don't like that idea, because at that income level, they can no longer claim that the cuts are for the middle class, a term that has some power in political fights. Mark Warner of Virginia has offered a plan that would not extend the rates for the wealthy in exchange for targeted tax cuts for business. The plan has no GOP support yet, and while some Democratic officials like it, the details are too complicated to work out in the brief lame-duck session. (Congress leaves town for the week of Thanksgiving and then comes back for only a few weeks in December before heading home for good.)
The president had planned to discuss extending the Bush tax cuts when he met with Democratic and Republican Congressional leaders Thursday, but Republican leaders had scheduling conflicts. The meeting is now scheduled for Nov. 30. That would leave just a couple of weeks for the president and the GOP to make a deal before Congress is scheduled to go home. What's a game of chicken without a little time pressure?
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