With the Senate preparing to take up President Barack Obama's proposed tax cut plan, the economic debate over the deal (supporters call it a new stimulus, opponents warn it will increase the deficit to dangerous new highs) is raging on. But as the deal looks more likely to become law, what will be its political impact? Will the tax cuts and the extension of unemployment benefits, which is part of the deal, ultimately hurt or help Obama politically? What about the sometimes ugly process that got us here, including the GOP's promise to hold all legislation hostage until Democrats approved the cuts? Here's what people are saying--despite the first bit of liberal outrage, many think Obama may come out on top.
- Could Create Split in the GOP National Review's Robert Costa warns of "growing discontent on the right over the deal, which was brokered by Senate GOP leader Mitch McConnell. While a broad swath of the GOP has backed the compromise, conservative lawmakers appear to be proceeding uneasily: Most are unhappy with aspects of the deal, but only a few are willing to completely shun it." Costa says Obama's ability to put "hold-your-nose compromises" into the bill could divide Republicans, perhaps for some time, over whether those compromises were worth it.
- Will Become Major Obama Victory The Atlantic's Andrew Sullivan says this deal "got the GOP to endorse a huge fiscal stimulus for Obama as he runs for re-election--a stimulus that could, according to Morgan Stanley, push economic growth to as much as 4 percent next year. That might be an overshoot--but it's surely salient that no one thinks the package won't boost growth at all." He says this could give a "black eye" to the Republicans and start a "GOP civil war" once "the deal is passed, and the truth of it sinks in with the base."
- Polling on Tax Cuts is Unclear "Two-thirds of Americans want the Bush tax cuts for the nation's wealthiest to expire at the end of the year, according to one recent poll," Talking Points Memo's Jon Terbush writes. "But in another poll, two-thirds of Americans want to extend all of the Bush tax cuts--including those for the country's top earners." Terbush notes that, although pundits on both sides can cite polls backing their position, the reality is less clear. "So while there are plenty of numbers floating around on the tax debate, one thing is clear: it's not a matter of who you ask, but how you ask."
- Targeting the Middle Class The New York Times' David Herszenhorn points out that "a hefty portion of the $858 billion tax package will benefit middle- and upper-middle-income Americans--precisely the demographic that felt neglected the last two years as the White House and Congress focused on the major health care law and on helping the unemployed and people facing foreclosure." He catalogs what he says is a "head-spinning array" of "provisions that benefit the middle class." This "laserlike focus on the middle class in the months ahead" is meant to appeal to a group that has been less than thrilled with recent economic trends.
Barack Obama won the great tax-cut showdown of 2010--and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years--which just happen to be the two years of the run-up to the next presidential election. This is a defeat?