Battle Over Tax Cuts Tests Obama’s Leadership Skills
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By Kirk Victor,
The Fiscal Times
December 1, 2010

Minutes after their meeting broke up yesterday, President Obama and Republican congressional leaders sounded more conciliatory than at any time since the beginning of Obama’s presidency. But even as their upbeat comments were the talk of the town in Washington, battle lines were being drawn.

Republicans are united in favor of an across-the-board extension of the Bush tax cuts due to expire at the end of the year — something Senate Minority Leader Mitch McConnell, R-Ky., made clear. “We did have an opportunity to reiterate that it is the view of 100 percent of Senate Republicans and a number of Senate Democrats, as well, that the tax rates should not be bifurcated; in other words, that we ought to treat all taxpayers the same,” McConnell said at a press conference after the White House meeting.

That means there may be little give in the GOP negotiating stance — except on a timeline for extending the cuts. Perhaps the most Republicans would compromise was signaled by Sen. Jon Kyl, R-Ariz, the assistant Senate minority leader, who said on NBC’s Meet the Press on Sunday, “Obviously, we'd like to do it permanently, but if it's three or four years, that's fine, too.”

Obama's Options
Obama doesn’t have the luxury of a unified party. He has said repeatedly that tax cuts should be limited to those earning $250,000 or less, a position embraced tenaciously by his party’s base. These progressives insist that the president must hold firm.

But if Obama were to draw a line in the sand and resist even a temporary extension of the tax cuts for all taxpayers, he not only will be challenging Republicans, but also as many as seven Democratic senators who reportedly favor a temporary extension for everybody.

As the president weighs his options, it is clear this is a test of his leadership. Obama cannot handle it as he has other major issues, when he sat back as lawmakers hammered out the details, said Stuart Eizenstat, who was President Jimmy Carter’s top domestic policy adviser. “He will have to take the baton and try to fashion a compromise. It will be extremely difficult because he will be under pressure from the left in his party not to compromise on tax cuts above $250,000.

“The great balancing act,” Eizenstat added, “which Bill Clinton had after the ’94 elections, is to try to keep the base satisfied while at the same time showing independents and moderates that he can govern and that he understands the need to hew to the center … It is going to take a lot of creativity and talent and work.”

But what if the president refuses to budge on extending tax cuts to the wealthiest and Republicans don’t blink, sticking to their guns that the cuts must be extended for everybody? Might the moderates who deserted the Democrats in droves in the recent midterm elections be further turned off by a president who appears inflexible?

Liberals insist the public will rally to a principled stand against tax cuts for the wealthy at a time of high debt and deficits, especially since so many others are sacrificing, including federal workers who face a two-year pay freeze that Obama announced earlier this week.

“We have to be tougher negotiators in general, we Democrats,” Rep. Janice Schakowsky, D-Ill., said in an interview with The Fiscal Times. “The American people are worried about the deficit and the debt, which will be enormously increased if we extend tax cuts for the wealthy. All of these things are in play and the Republicans keep moving the goal posts. We have to draw some lines in the sand.”