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Not A Cunning Plan

Yesterday, I was criticizing the tax deal and some of its more imaginative defenders. Jonathan Bernstein picked up on the second part and responds:

The problem is that Obama either had to abandon the core commitment to end the Bush-era tax cuts for the rich, or the core commitment to continue Bush-era tax rates for everyone else. He didn’t have the votes to keep both core commitments. End of story.

I mostly agree with that. Once Obama insisted on a certain agenda during this final session of the year and the Senate GOP remained united behind their no-action-before-tax-cuts line, he was stuck with accepting bad options. My main objection to the deal itself is that it is fiscally irresponsible, and my concern about it is that the deal shows that there is no significant interest in deficit reduction on either side. I suppose we have all known that there was no significant interest in this, but the deal confirmed it. Quite a few defenders of the deal have also been making implausible claims that striking a deal that everyone agrees was forced upon him by necessity means that Obama has somehow cleverly set the stage for eventual triumph down the road. What I was trying to say in the section Bernstein quoted was that these claims of eventual triumph make no sense. Krugman has a persuasive explanation of why they don’t:

Look at the Zandi estimates: they show a boost to the economy in 2011, which is then given back in 2012. So growth is actually slower in 2012 than it would be without the deal.

Now, what we know from lots of political economy research — Larry Bartels is my guru on this — is that presidential elections depend, not on the state of the economy, but on whether things are getting better or worse in the year or so before the election. The unemployment rate in October 1984 was almost the same as the rate in October 1980 — but Carter was thrown out by voters who saw things getting worse, while for Reagan it was morning in America.

Put these two observations together — and what you get is that the tax-cut deal makes Obama’s reelection less likely. Let me repeat: the tax cut deal makes Obama less likely to win in 2012.

If Obama’s supporters want to say that he harmed his political interests to strike the best deal he could manage under the circumstances, that’s one thing. It’s something else to say that the Republicans have just fallen into Obama’s roadrunner jujitsu trap, as Andrew seems to think. What has happened is that Obama has given us an advance preview of the nature of hostage budget negotiations for the next two years, and he did so before his party’s majorities ended. I stand by my assessment that this is not what a cunning plan looks like.

At his press conference, Obama justified the deal by saying that he didn’t have the votes in the Senate for his preferred option, but he and everyone else understand that he and his party will have many fewer votes for his preferred option in the next Congress. Indeed, in the House his preferred option won’t receive a hearing. So it isn’t as if Obama is temporarily retreating in order to re-take the ground later–he’s just retreating. The best that one can say about it is that at least it was a more or less orderly retreat. His bargaining position a year from now will not be as strong as it is today, and in terms of Democratic numbers in the Senate it could very well be weaker in two years’ time than it will be before the next election.

about the author

Daniel Larison is a senior editor at TAC, where he also keeps a solo blog. He has been published in the New York Times Book Review, Dallas Morning News, World Politics Review, Politico Magazine, Orthodox Life, Front Porch Republic, The American Scene, and Culture11, and was a columnist for The Week. He holds a PhD in history from the University of Chicago, and resides in Lancaster, PA. Follow him on Twitter.

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