The debate over taxes is always contentious, but never more so than this year. The debate comes at a time when many Democrats are frustrated with Obama’s attempts at bipartisanship, feeling that Republicans haven’t reciprocated. Yet it also follows a midterm election in which Democrats lost their House majority, allowing Republicans to claim they had a mandate to reject Obama’s policies.
Obama’s decision to compromise with the Republicans and extend (short-term) the Bush tax cuts for everyone has angered many Democrats. They argue that Obama didn’t gain enough concessions – not only are the tax cuts continued, but the estate tax has a lower rate and a higher exemption than Democrats wanted.
While I am also frustrated, I am also sympathetic. What was Obama to do? Paul Krugman argues that Democrats should have let the tax cuts expire rather than extend them. He – and many Democrats – point to the hypocrisy of Republicans’ refusal to extend jobless benefits without equal cuts, yet their extension the tax cuts without the same attention to government revenue. Yet after Republicans not only shot down the Democratic proposal to extend the Bush tax cuts only for the lower- and middle-class, but also promised to block any legislation before addressing the tax cuts, they put Democrats in a very uncomfortable position.
Nate Silver perhaps lays out the arguments best. Democrats to some extent couldn’t afford to let the tax cuts expire for everyone: it would be bad for the economy. Further, the Republicans also didn’t show any signs of being willing to extend jobless benefits without this large concession. Finally, while the majority of Americans support the Democrats’ original position – extend the tax cuts for everyone except those at $250,000+/year – not extending them at all was the worst possible outcome in the eyes of the public.
So what could Democrats have done? I think they needed to make the positions clear much earlier. They should have forced the Republicans to vote against a middle-class tax cut without the upper-class one – and highlighted it. They should have pointed to the polls more, which demonstrated that their position was the one held by the country. They should have talked even more about the deficit and the implications of the extension.
But what should they do now? They should continue talking about all of these things – but they should probably accept the “compromise.” Yes, compromise cannot work when it’s only one party doing it and yes, the Republicans are holding Democrats hostage to some extent, but Democrats are doing the right thing: putting the needs of the country ahead of their own. The country cannot afford the tax hikes on the lower-income brackets, nor can it afford ending the jobless benefits.
It’s not a position that tends to help politicians – Russ Feingold’s loss is a clear example – but they are, after all, public servants. Much as I hate to say it and as frustrated as I am, I am proud that Democrats recognize the needs of the country and put them first – even about their own ideology.