POLITICO.COM "The Arena" : Obama tax plan a stealth 'stimulus'? - Although Obama gave away a few things policy-wise, he has dramatically boosted his re-election prospects for 2012

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This "Arena" inside POLITICO.COM is always wonderful, and the writers of the best comments are always the same smart guys. Other comments are not so good. I choose only the best.

POLITICO.COM "The Arena"
Obama tax plan a stealth 'stimulus'?
December 10, 2010


Obama tax plan a stealth 'stimulus'?


Some excerpts :

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David Mark Moderator :

Columnist Charles Krauthammer labels the tax cut deal a stealth "stimulus" plan aimed at priming the U.S. economic pump leading up to President Obama's 2012 reelection bid. But New York Times columnist Paul Krugman says it's a bad deal because newly-extended unemployment benefits will expire just as the 2012 race heats up, while deficit-busting tax cuts will continue.

Who is right?

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Jonathan Cowan President and co-founder, Third Way :

Shhhh! Don’t tell Republicans…but this is the best thing that could happen for Obama. In exchange for one item on the Republican wish list, Obama gets an unprecedented and massive payroll tax cut for the middle class, a college tuition tax break, a major extension in unemployment benefits, a handful of badly needed business provisions, and nearly a trillion dollars in new stimulus spending in the form of tax breaks.

Democrats should take the deal before the Republicans figure out, in the words, of Charles Krauthammer, that they’ve been “snookered.” Of course the GOP is likely expecting that many Democrats will follow the ill-conceived advice of Paul Krugman and others on the left who refuse to remove their ideological blinders and see how strong and urgently needed this package is. If they do that, they’ll most certainly have managed to snatch defeat from the jaws of victory.

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Craig Shirley Reagan biographer and president, Shirley and Banister Public Affairs :

The Republicans had their pants taken off by Obama and they don’t even know it.

Rather than making the marginal rates permanent (or even lower) they left themselves to fight again over the same terrain in two years, rather than mounting an offensive campaign to continually lower the rates.

Even a mediocre commander would tell you that you shouldn’t have to fight for the same terrain twice.

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Ken Feltman Chairman Radnor Inc.; Past president of the International Association of Political Consultants :

I hate to disagree with both Charles Krauthammer and Paul Krugman, but the White House had other motives for making the tax deal. The president is running for reelection and he is positioning himself as the "only reasonable man" in Washington.

So far, the liberal Democrats are behaving just as the White House would have hoped: Rigid ideologues who will put the vast majority of Americans at risk of a tax increase, while jeopardizing the continuation of unemployment benefits for desperate families, all in pursuit of their goal of income redistribution.

The Republicans are keeping quiet, letting the congressional Democrats self-destruct. Once the Republicans start talking, we will see whether they can use this opportunity to work constructively with the White House or whether they will get bound up in partisan rhetoric.

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Rich Gold Partner, Holland & Knight LLP :

I never thought I would write these words, but Krauthammer is right and Krugman is wrong. Ouch, that hurt.

As I wrote the other day in this space, the president got such a deal from a policy and a political perspective. He negotiated the longest unemployment extension in history and wrestled a significant amount of -- yes I will use the word -- stimulus funding from the Republicans in return for a short-term extension of lower income tax rates for the wealthy and an estate tax extension. And from a political perspective, he comes off as the uniter not the divider.

It probably helps him to have House liberals throwing a temper tantrum as he gets to wear the “I stood up to my party when they were obstinate” badge to holiday parties the next few weeks. Where’s the loss here?

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Darrell M. West Vice President, Governance Studies, Brookings :

Krauthamer is right on this one. The hidden truth about this legislation is that it is a second stimulus package. Some economists estimate that it will cut unemployment by at least 1.5 percentage points over what otherwise would be the case. Although Obama gave away a few things policy-wise, he has dramatically boosted his re-election prospects for 2012.

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John Michael Gonzalez Lobbyist and Democratic strategist :

The president not only got a stealth stimulus plan in the deal but it is, for the most part, mostly a tax relief stimulus. This is why both the hard left and the hard right are apoplectic. It is hard to imagine that this would have been possible. Say what you will, but this president's still got game!

This is why mayors and governors from every part of the country are issuing statements of support for this tax cut deal.

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