What is Obama Thinking on the Tax Deal?

What is Obama Thinking on the Tax Deal?

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Let’s see if I have this tentative tax deal between President Obama and Congressional Republicans right.

Obama accepts a "fiscal responsibility commission" and then appoints five commissioners who recommend cutting Social Security, irresponsible and unrealistic caps on discretionary spending, and equally dubious caps on Medicare. All this while cutting tax rates on high incomes and eliminating tax preferences that, whatever their other faults, are deeply entrenched in how middle-class Americans have organized their finances.  And Obama does this all because the deficit is so important.

Then in order to get a necessary extension in unemployment benefits, and a few other tax provisions that could have some useful stimulative effects, he accepts the substantial Bush tax cuts across the board that will do less to stimulate the economy than most other deficit-increasing policies.  He also sets this up so he will almost have to extend the tax cuts again as part of his reelection campaign.  

At a minimum, Obama should have proposed a phase-down rather than a two-year extension -- with the phase-down beginning immediately.  Instead, the tentative deal would accept the Republican position that lower taxes are more important than deficit reduction; while the fiscal responsibility commission report suggests that cutting Social Security and Medicare and other programs is necessary in order to reduce the deficit.

President Clinton agreed to a questionable welfare reform after his midterm defeat, but at least he stood up to the Republicans on other issues, and at least welfare reform was popular.  What is Obama's excuse, and what could either his policy or political reasoning possibly be?

Joseph White is Director of the Center for Policy Studies at Case Western Reserve University.

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