Over the Top Rhetoric Can’t Disguise Administration’s Retreat

Today, liberals are up in arms about the deal President Obama cut with Congressional Republicans yesterday. Check out the headlines in the online Washington Post: “Biden to Soothe Angry Dems,” “Obama’s Disastrous Path,” “Did Obama ‘Blink’?” “Deal Has Liberal Dems Fuming.” Obama held a news conference this afternoon to explain the thinking behind the agreement. Reporters obliged him by acting as stand-ins for the Democratic Party’s angry left–a role that they seemed to fall into with ease.
President Obama took the opportunity to placate his party’s base with tough talk:

QUESTION: You’ve been telling the American people all along that you oppose extending the tax cuts for the wealthier Americans. 
OBAMA : Yes.
QUESTION: You said that again today.  But what you never said was that you opposed the tax cuts, but you’d be willing to go ahead and extend them for a couple of years if the politics of the moment demand it.
 
So what I’m wondering is, when you take a stand like you had, why should the American people believe that you’re going to stick with it? Why should the American people believe that you’re not going to flip-flop?
OBAMA: Hold on a second. This isn’t politics of the moment. This has to do with what can we get done right now?
So the issue — here’s the choice. It’s very stark. We can’t get my preferred option through the Senate right now. As a consequence, if we don’t get my option through the Senate right now and we do nothing, then on January 1st of this — of 2011, the average family is going to see their taxes go up about $3,000. Number two, at the end of this month, 2 million people will lose their unemployment insurance.
 
Now, I have an option, which is to say, “You know what? I’m going to keep fighting a political fight which I can’t win in the Senate.” And, by the way, there are going to be more Republican senators next year, sworn in, than there are currently. So the likelihood that the dynamic’s going to improve for us getting my preferred option through the Senate will — will be diminished. …
Now, if there was not collateral damage, if this was just a matter of my politics or being able to persuade the American people to my side, then I would just stick to my guns because the fact of the matter is the American people already agree with me. There are polls showing right now that the American people for the most part think it’s a bad idea to provide tax cuts to the wealthy.
But the issue is not me persuading the American people; they’re already there. The issue is how do I persuade the Republicans in the Senate who are currently blocking that position. I have not been able to budge them, and I don’t think there’s any suggestion anybody in this room thinks realistically that we can budge them right now.
QUESTION: Let me follow up quickly, sir.  You’re describing the situation you’re in right now. What about the last two years when it comes to your preferred option? Was there a failure either on the part of the Democratic leadership on the Hill or here that you — that you couldn’t preclude these wealthier cuts from going forward?
OBAMA: Well, let me say that on the Republican side, this is their Holy Grail, these tax cuts for the wealthy. This is — seems to be their central economic doctrine. And so unless we had 60 votes in the Senate at any given time, it would be very hard for us to move this forward.

Of course, the Democrats did have 60 votes in the Senate from July 7, 2009, when Al Franken was sworn in after being declared the winner in Minnesota, until Scott Brown succeeded Ted Kennedy in February 2010. But they made no effort to raise income taxes during that time.
Here is where Obama went completely over the top:

QUESTION: Mr. President, what do you say to Democrats who say you’re rewarding Republican obstruction here?  You, yourself, used in your opening statement, “They were unwilling to budge on this.”  A lot of progressive Democrats are saying they’re unwilling to budge…
OBAMA: Right.
QUESTION: … and you’re asking them to get off the fence and budge. Why should they be rewarding Republican obstructionism?
OBAMA: Well, let me — let me — let me use a couple of analogies. 
I’ve said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it’s tempting not to negotiate with hostage takers, unless the hostage gets harmed. Then, people will question the wisdom of that strategy.
In this case, the hostage was the American people. And I was not willing to see them get harmed. 

Obama adopted Senator Bob Menendez’s theme that negotiating with Republicans is almost like negotiating with terrorists.
Despite his extreme rhetoric, Obama also showed flashes of lucidity. Here, he sounded like a Republican:

The single most important jobs program we can put in place is a growing economy. The single most important anti-poverty program we can put in place is making sure folks have jobs and the economy is growing.
We can do a whole bunch of other stuff, but if the economy is not growing, if the private sector is not hiring faster than it’s currently hiring, then we are going to continue to have problems, no matter how many programs we put into place.
And that’s why, when I look at what our options were, for us to have another three, four, five months of uncertainty, not only would that have a direct impact on the people who see their paychecks get smaller, not only would that have a direct impact on people who are unemployed and literally depend on unemployment insurance to pay the bills or keep their home or keep their car, but, in terms of macroeconomics, the overall health of the economy, that would have been a damaging thing.

I suspect that this answer provides the real clue to Obama’s willingness to strike a deal. He knows that he has no hope of being re-elected in 2012 unless the economy improves significantly. His economic advisers no doubt told him that increasing taxes on those who are already paying more then their fair share and who are the main engines of economic activity would retard economic growth. It is fair to assume that they also told him that a partial payroll tax holiday would be the quickest way to incentivize employment. So Obama tries to have his cake and eat it too: giving in to what he knows is sound economic policy, while at the same time denouncing Republicans as hostage-takers for advocating it.

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