Tax Deal a Sign of Obama's New Normal

After the midterms, say media outlets, the president must deal with emboldened GOP and frustrated, rebellious Democrats

The deal to extend all the Bush tax cuts for two years is the first sign of the new normal in Washington in the wake of last month's midterm elections, declares The New York Times. President Obama faces Congressional Republicans who are "newly empowered," the Times' David M. Herzenhorn and Jackie Calmes report, as well as an increasingly frustrated Democratic Party as the White House "navigates between a desire to get things done and a retreat from his own positions and the principles of many liberals." In fact, even as the GOP cheered the deal, some Democrats on Capitol Hill emphasized that they hadn't yet agreed to anything.

Of the many compromises in the deal, some Democrats are most infuriated by Obama's concessions on the estate tax, giving a $5 million exemption per person and capping the tax rate at 35 percent. (The old rate allowed a $1 million per person exemption and a 55 percent maximum tax.) On the other hand, unemployment benefits will stay. Obama said he wasn't excited about the tax cut extension, either, but stressed it was better to compromise than to allow the middle class tax cuts to expire, too. Meanwhile, top Republicans were "clearly relishing the upper hand they have held in the tax fight" and praised the deal.

Reactions to the deal from both liberals and conservatives in the media range from pleasantly surprised to gloomily disappointed.

• White House Blames the House Democrats, ABC's Jake Tapper reports. Its response to frustrated Congressional Dems is that they only have themselves to blame. They never "took up the charge and held a vote." The White House says it wanted a fight, but "it was like the Jets versus Sharks except there weren't any Jets," an administration official told Tapper. "Senator Schumer says he wants a fight? He couldn't hold his caucus together." Zing!

• Quite a Turn of Events, James Capretta writes at The National Review. "The Democratic party has more or less defined itself over the last decade by opposing the supposed irresponsibility of the Bush-era income-tax rates," but now, Obama has endorsed those rates for the rest of his first term. Plus, the estate tax levels are even better than they were during the Bush years, Capretta writes. "More broadly, the president's agreement to this deal is an implicit admission that voters aren’t buying what the Democrats have been selling on the budget for the past year.  The primary argument Democrats pushed throughout 2010 was that the country simply could not afford to 'spend' anything more on tax cuts for the wealthy."

• Anti-Tax Crusader Grover Norquist Is Pleased, Andrew Stiles reports for The National Review. Norquist thinks his deal is "'a much bigger victory than people see' for the Republicans. ... If the Democrats are losing this fight now, with large majorities in both houses of Congress, it will only get much worse for them when Republicans take over the House and install a filibuster-proof coalition in the Senate in 2011 ... Norquist thinks this deal on taxes has the GOP off to a good start."

• GOP Failing to Keep to Campaign Promises Already, Stan Collender writes at Capital Gains and Games. "After making the budget deficit not just a campaign issue but the campaign issue of 2010, one of the very first legislative things the Republicans in Congress will do after the election is agree to... increase the deficit." This hypocrisy "ranks right up there with Lyndon Johnson campaigning against Barry Goldwater in 1964 by criticizing his plan to increase military activities in Vietnam and then, after the election, having the Pentagon do many of the things he had criticized Goldwater for suggesting."

• Imperfect, But Not That Bad, The Washington Post's Ezra Klein writes. Klein is psyched unemployment benefits were extended for 13 months, when he'd expected nothing, or maybe a 3-month extension. The deal is "a lot better than I would've told you the White House was going to get if you'd asked me a week ago. There's some new stimulus in the form of the payroll-tax cut and the expensing proposals," plus older stimulus measures will continue. The higher income tax cuts are "bad," the estate tax deal "noxious." Klein concludes: "Most of the money just keeps programs that are currently in effect from expiring, so in some ways, it would be more accurate to say that this money is anti-contractionary rather than stimulative."

• Obama Got More Than Expected from Republicans, Jonathan Chait argues at The New Republic.

Of course [Obama] also gave up more, agreeing to an extension of a low estate tax rate, which is apparently crucial as an incentive for rich people to, uh, die. Why were Republicans so flexible? They are willing to deal away a lot if they're getting tax cuts for the rich. ... Unfortunately, it tends to be terrible policy. But it's the party's core policy goal, and if you help them attain it they can be surprisingly reasonable.

• 'Monstrous' Concession, liberal David Dayen writes at Firedoglake. "The $5 million, 35% estate tax is a crime. ... Republicans get that restored at the lowest rate in history. ... There's no way on the planet to describe that policy as stimulative. You're just giving more money to the heirs of the ultra-rich."