Defending the President on the Tax Cut Compromise

I've been quite vocal on the subject of tax cut strategy, I've made efforts to craft a message that Democrats and President Obama could use and I've clarified that I disagree with the strategic decision to fold on this issue. But listening to President Obama speak on the subject over the past two days has inspired a slight re-analysis of my stance.

I still believe that the best strategy would have been to call the Republicans' bluff, but I must confess some uncertainty about the stimulative effect of middle class tax cuts and unemployment extensions. President Obama believes that the economic impacts caused by losing these income streams far outweigh the benefits of fighting now to increase the top tax rates--which will inevitably go up. And he may very well be right, given the current state of the economy. Indeed, the only part of the "tax hikes mean fewer jobs" mantra that makes sense regards the stimulative effect of middle class spending. Policies impacting the job-creation behaviors of the investor class are far more subtle and regulation-focused.

While I'm not yet sure that I believe the predicted harms of a higher middle-class tax bill, it's clear that Obama does. In that world--and a world where Senate Republicans have a proven willingness to filibuster anything--his move is the only one available. In the end, the re-election of Barack Obama will be determined by the health of the American economy. If he is correct in his belief that this deal is the best move for short-term job creation, then it is also the best move for 2012 politics. Remember that the President will be held responsible if the recovery falters in advance of the election.

As the president signaled today, there will be plenty of other opportunities to stand for the core principles of the Democratic Party in the years to come. Those opportunities, outlined today, include long-term budget solvency and significant tax reform. These are areas where Republicans will also be forced to make their values obvious. This is the fight that starts once Boehner takes office. It's a fight that Democrats are poised to win, if they can figure out a way to clearly articulate their values--and stand up for them. I just hope the president really came to fight.