Prepare Yourself For The Extension Of The Bush Tax Cuts

06/12/2012

"Government programs," Ronald Regan once said, "once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!"

Amiright?! That Reagan guy was a riot. Now, somebody go dig him up and introduce him to the Bush tax cuts, which, as we approach election day, are appearing as close to eternal life as government bureaucracy.

The cuts were supposed to expire in 2010, but Obama leveraged them for a slew of legislative victories, including the end to DADT. Liberals were pissed, until they realized this move was actually prescient long-ball political strategy: Obama kicked the expiration of the Bush tax cuts into an election year, under the idea that the GOP would be forced to defend tax breaks for millionaires while also trying to run for their jobs in the aftermath of a recession. Dance, suckers.

Welp, here we are, election year 2012, and already there are signs that its the Democrats, not the Republicans, who are softening on the issue. First, Bill Clinton said the extension of the tax cuts was necessary to avoid harming the economy, though he later added that that depends on what your definition of "Bill Clinton said" is. Next, a smattering of Democrat legislators, including Claire McCaskill (D-Mizzou) and Bill Nelson (D-America's Wang), acted like they didn't hear the question on whether they'd vote to let the tax cuts expire. It is loud in the Capitol hallways.

Now, Michael Tomasky at the Daily Beast has a piece out in which he suggests Obama propose extending the Bush tax cuts for one year in exchange for infrastructure and public sector spending:

The politics of this idea seem awfully sound to me. Obama would have the Republicans over a barrel. He will have offered a huge concession on the high-end tax rates, which the media will note. If the Republicans say no, which of course is likely because the infrastructure bank is socialism and no one wants teachers anyway, then it becomes manifestly clear to swing voters that Republicans are the true obstructionists. Voters will get that Obama will have made a major concession here. They’ll see that the GOP fails to respond in kind, and most of them will draw the logical conclusion.

And if the Republicans say yes, then even better: they will have made Obama, at this eleventh hour of his first term, into the bipartisan leader they’ve so successfully prevented him from being.

I don't buy any of this—how, after three years of an intentional obstructionism that reached its apotheosis in the debt ceiling debacle last fall, this will suddenly be the one piece of Republican obstructionism that turns voters against the GOP, is beyond me. Perhaps voters really do follow the Feiler Faster Thesis, and can only vote on events that happened since the last episode of Teen Mom.

But Tomasky's thesis hits on a political reality that's becoming more and more difficult to ignore: the biggest leverage Obama has right now are the Bush tax cuts, and he has to use them. Given the slowdown in hiring, Obama has to do something to get the economy moving, and anything he can do has to go through a Republican House and a 60-vote Senate. His biggest bargaining chip is the Bush tax cuts. Republicans want them bad. They want them more than they want to bring down the deficit, eliminate the debt and lower unemployment combined, as letting the Bush tax cuts (can we please start referring to them as BTCs?) expire would aid in all of those projects.

I see it as much more likely that Obama will have to use the Bush tax cuts to get out of the fiscal cliff that's coming towards the end of this year, in which massive spending cuts are set to coincide with a slew of tax increases, including but not limited to the Bush tax cuts, such as the expiration of the payroll tax break. The combo is set to run sideswipe the already sluggish economic recovery, and legislation to avoid it will likely turn into one of those awful eleventh-hour dealmaking session in which Obama walks out one door and goes, "Blah!" and Boehner walks out the other door and goes, "Double-blah!" and the whole things ends with spending increases and tax cuts and the promise that some committee will solve it all in six months with bipartisanship beans.

But even in that scenario, the Bush tax cuts get extended. If PoliticOlogy were a bettin' blog, it would give the BTCs an 80% chance of being extended by the end of the year. In fact, the more their extension seems inevitable, the more likely Obama is to leverage their extension for political gain before the election, so I'll give 35% that they get extended before November. And yes, Obama will do all this only to be portrayed as a polarizing socialist.

Of course, he's going to be portrayed as a polarizing socialist no matter what he does, which is why I'm happy that his administration is thus far holding to their position that the extension of the BTCs is off the table. But how long, with an election looming and an economy stalling, can he keep them there?

[Confidential to Tomasky: liberals were not fine with Obama's 2010 extension of the BTCs.]

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