Monday, December 20, 2010

Obama proves he's politically nimble

After Democrats got "shellacked" in this year's elections, many wondered how long it would take President Barack Obama to move "back to the center" in the face of an incoming Republican majority in the House and a diminished Democratic majority in the Senate.

Turns out it took about a month for Obama to get on top of the situation.

And, he didn't really have to go all that far to get "back to the center," particularly compared to the incoming class of Republicans.

Although the recent deal Obama cut with the Republicans on the Bush tax cuts was roundly denounced by liberals in and out of Congress, it seems he was fairly adept at using what Republicans wanted above all else -- a tax cut for rich folks -- to get something Democrats had no other chance at -- a second stimulus package.

Republicans, who won the election saying they cared about the deficit, quickly showed where their allegiance really was, negotiating a major increase in the deficit for a two-year extension of the George W. Bush's tax cuts for those making more than $250,000 per year.

They've also put themselves in a position where they are virtually forced to vote for an increase in the nation's debt ceiling, which will alienate their Tea Party backers, to pay for the tax cuts they asked for.

The deal includes other tax cuts, including a temporary roll back of the Social Security payroll tax, that will pump money into the economy. It also included an extension of unemployment benefits. That's something that Obama and the Demcrats wanted, but had no way to get past Republicans on their own.

Those measures can only help the economy by putting more money in the hands of people very likely to spend it. Obama hopes that it helps enough to win him re-election two years from now.

In return, the GOP really got only part of what it wanted. Republicans campaigned on and negotiated for making all of the Bush tax cuts permanent. Instead they've only been extended for two years. That includes a restoration of the Estate Tax at 35% on estates worth more than $5 million. While some Democrats think that's too much, the Republicans wanted no inheritance tax at all. The two-year extension means the GOP's insistence on cutting taxes for the wealthy and trying to ensure Paris Hilston inherits as much as possible while resisting help for working folks struggling during the recession remains a potent campaign issues for Democrats in 2012.

About the only place where Obama stumbled, and this is a mistake he's been prone to, is that he wasn't tough enough in negotiations. He underestimated how much Republicans wanted that tax break for the well off.

He should have pushed to make the tax cuts for those making under $250,000 permanent, which both he and the Republicans claimed to want. That would have decoupled the tax cuts. It would have forced Republicans to lobby for the additional tax cuts for the rich (who benefit from the tax cut on incomes below $250,000) on its own merits in two years.

Since the richest 10% of Americans have enjoyed virtually all of the growth in income in the last 30 years, while the middle class grew smaller and CEO pay went from 50 times that of the average worker to 500 times what their workers make, that would have been a tough case to make.

Obama managed to get more stimulus for the economy and to avoid a tax increase that could have slowed the recovery. Economic indicators seem to show that the wealthy have returned to buying much faster than the rest of us. Obama certainly didn't want to slow that trend now. Republicans may  have miscalculated in not understanding that it wasn't in Obama's interest to end the tax cut for the wealthy immediately.

Some on the right are gleeful because they believe Obama has alienated his liberal base. And the hue and cry on the left has been fearful.

But where do they have to go? And, really, what did they expect?

If you were looking for a fighting liberal in the 2008 Democratic primaries, Obama wasn't your man. You were backing Dennis Kucinich or, if you were a little more realistic, John Edwards (before he was revealed to be a cad). Obama ran as, and has governed as, a pragmatic centrist.

He didn't propose a public option on health care reform. In fact, he proposed a plan pretty much identical to the one Republican Mitt Romney authored as governor of  Massachusetts.

Some conservatives are expecting Hilary Clinton to primary Obama in 2012. I'd bet $100 that it doesn't happen. If Obama is primaried it will be by the likes of Kucinich or Mike Gravel and it won't amount to much. Obama will win the nomination easily.

If he does, who is the left going to vote for in 2012? Sarah Palin? Newt Gingrich? Mitt Romney? Not likely.

Just as the rabid right has little choice but to vote for the Republican nominee, the loony left has few options aside from the Democratic nominee.

In making the tax deal with the Republicans, Obama looks like a pragmatic grown up.

I'd argue that's what attracted independents to  him in 2008. And that's who  he's targeting as 2012 approaches.

Republicans scored a big win on Election Day. But since Election Day, I think you'd have to say Obama is ahead, 1-0.

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