Obama's 2010 Lame-Duck Tax Deal Was a Triumph, Not a Sellout

A blog about business and economics.
Nov. 26 2012 8:16 AM

Obama's 2010 Lame-Duck Tax Deal Was a Triumph, Not a Sellout

President Obama greets onlookers after shopping with his daughters at One More Page Books on Saturday in Arlington, Va.

Pool photo by Kristoffer Tripplaar/Getty Images.

I was in Germany when the 2010 lame-duck session struck a deal to extend the Bush tax cuts for two years, so at the time I was both a bit out of the loop and a bit outside the bubble of conventional wisdom. But looking back on it, I've been surprised to see the extent to which that deal was judged at the time to be weak bargaining on the part of the president. David Corn has an interesting piece pushing back on the myth of the Obama cave-in, but I'd go further—the deal was a triumph.

Recall the terms. Then, as now, both the middle-class tax cuts that Obama favors and the high-end tax cuts that he doesn't favor were scheduled to expire. Then, as now, Unemployment Insurance benefits were scheduled to expire. Then, as now, interest rates were low and the unemployment rate was high.


So Obama secured a deal that extended the middle-class tax cuts (which he and the GOP agreed on), extended UI benefits, created a stimulative payroll tax holiday, cleared the legislative decks for "don't ask, don't tell" repeal and the passage of the New START arms-control treaty, and in exchange he gave up nothing of any real substance. Republicans got two more years' worth of high-end tax cuts at a time when deficit reduction wouldn't have helped the economy, and House GOP opposition would have prevented any new revenue from being spent. Whatever formal leverage he had two years ago still exists today, except now he gets to play that leverage from a somewhat stronger economic and political context. It's totally solid legislative dealmaking and not any kind of cave-in or surrender.

Corn says the real problem with the deal was that Obama didn't adequately frame it this way, but that seems to be a core part of the deal. To get a favorable deal Obama had to downplay the extent to which he hadn't given anything up.

Perceptions of this whole affair may be retroactively colored by the fact that Obama really did spend a fair amount of 2011 engaged in hopelessly mismanaged negotiations around the debt ceiling. That was basically a fiasco from start to finish until at the very last minute the Obama team did manage to rally and structure the budget sequester in a pretty clever way. But it's a mistake to read that episode back into the lame-duck deal where Obama obtained tangible wins in exchange for a very mild concession.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



Talking White

Black people’s disdain for “proper English” and academic achievement is a myth.

Hong Kong’s Protesters Are Ridiculously Polite. That’s What Scares Beijing So Much.

The One Fact About Ebola That Should Calm You: It Spreads Slowly

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

A Jaw-Dropping Political Ad Aimed at Young Women, Apparently

The XX Factor
Oct. 1 2014 4:05 PM Today in GOP Outreach to Women: You Broads Like Wedding Dresses, Right?

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

How Tattoo Parlors Became the Barber Shops of Hipster Neighborhoods

This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century

Oct. 1 2014 8:34 AM This Gargantuan Wind Farm in Wyoming Would Be the Hoover Dam of the 21st Century To undertake a massively ambitious energy project, you don’t need the government anymore.
  News & Politics
Oct. 1 2014 7:26 PM Talking White Black people’s disdain for “proper English” and academic achievement is a myth.
Buy a Small Business
Oct. 1 2014 11:48 PM Inking the Deal Why tattoo parlors are a great small-business bet.
Oct. 1 2014 6:02 PM Facebook Relaxes Its “Real Name” Policy; Drag Queens Celebrate
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
Brow Beat
Oct. 1 2014 9:39 PM Tom Cruise Dies Over and Over Again in This Edge of Tomorrow Supercut
Future Tense
Oct. 1 2014 6:59 PM EU’s Next Digital Commissioner Thinks Keeping Nude Celeb Photos in the Cloud Is “Stupid”
  Health & Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?