In a post below, John expresses his view that President Obama will benefit politically from the tax compromise (assuming it passes), both because the economy will improve–somewhat, anyway–and because some voters will perceive him as more of a centrist. I agree.
Obama’s re-election prospects have never been all that grim. His approval rating is only a little below break-even in a bad economy and following a number of stumbles. With some improvement in the economy and some gestures in the direction of bipartisanship, Obama would be, at a minimum, a credible candidate in 2012 even if the Republicans were able to unite behind a credible candidate of their own.
But the tax deal may condemn Obama to presiding over a divided government if he is re-elected. For the presumption will be that whatever credit Obama deserves for strking a deal that helped the economy also belongs to his partners in that deal, the congressional Republicans. Similarly, whatever credit Obama deserves for reaching across the aisle will also go those who reached back to him.
If the deal is perceived as successful, the Democrats will argue that the “good parts” of the deal — continued middle class tax relief and extension of unemployment benefits — are what helped the economy. They will claim that the deal succeeded in spite of its “bad part” — continued tax relief for upper income citizens — which Obama agreed to as a politically necessary evil.
But this argument will only resonate with liberal Democrats. We saw how well the Democrats’ counter-factual argument that the recession would have been worse without the stimulus worked. A counter-factual argument that a recovery would have been just as robust, or more so, without the parts of the tax deal demanded by the Republicans will fare no better.
UPDATE: Democrats will also argue that the Republicans, by insisting on retaining the Bush era tax rates for upper income individuals, added to the deficit. But if the tax deal is viewed a year and a half from now as having improved the economy, voters won’t be inclined to fret about its impact on the deficit. Moreover, in a stronger economy, increased tax receipts will help offset the impact on net revenue of not raising rates.
In any event, the Republicans will have a great many opportunities over the next year and a half to demonstrate their seriousness about deficit reduction. Expect the Democrats consistently to be on the wrong side of this issue, as their efforts to lard up the tax deal with pork foreshadows.
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