Posted Monday, Nov. 26, 2012, at 8:16 AM
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.