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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Is Obama Pre-Compromising the Stimulus Package?

Progressive chatterers are in a bit of a stir over reports that the Obama administration’s Great Big Stimulus package could include as much as $300 billion in tax cuts, out of a total figure of approximately $750 billion.
Arguments over this alleged opening position can be divided into those who focus on economics, and on politics (Jonathan Cohn has a good overview of all the arguments at TNR).
Progressive economists, led by Paul Krugman, have largely defended the proposition that some kinds of tax cuts are inevitable and potentially worthy in a stimulus package of this size, if only because it’s tough to come up with upwards of three-quarters-of-a-trillion dollars in spending that (a) will boost consumption and employment immediately, and (b) don’t all represent permanent spending commitments that may be unaffordable in a year or two. And according to much of the guesswork going on right now, no more than a third of the tax cuts said to be in the Obama package are the sort of “business incentives” that Republicans love but that arguably don’t produce short-term economic gains.
The political arguments over offering this level of tax cuts are more interesting. There’s a widespread progressive fear–expressed by Krugman, Cohn, and especially MoJo’s Kevin Drum and Political Animal’s Hilzoy, among others–have expressed that this is an example of that Obama Bipartisanship they’ve been worried about. Here’s Hilzoy:

According to the WSJ, one reason for relying so heavily on tax cuts is that “it may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.” To which I can only say: screw them. Their economic philosophy got us into this mess; we should not let them force us to use ineffective means to get out of it.
If the Democrats can’t keep enough of their Senators in line to get this passed, and corral a couple of Republicans, then we’re in worse shape than I imagine. I’d really rather try to do it right before preemptively conceding to the Mitch McConnells of the world.

I don’t know that I would rely much on the Wall Street Journal to interpret Barack Obama’s political motives at this point, but again, the fear that he would get rolled by Republicans has been a concern in many progressive circles going back to the very beginning of his presidential campaign.
I have a different theory of what may be going on, based on a very different interpretation of Obama’s “bipartisanship” than is common among progressives. If, as I’ve suggested, Obama’s strategy is to pursue a form of “grassroots bipartisanship” that builds broad public support outside Washington, a stimulus package that includes significant and popular middle-class-oriented tax cuts–a centerpiece, lest we forget, of his presidential campaign–makes a lot of sense. It’s Republican, independent, and Democratic constituencies outside Washington–already roiled by the special-interest orientation of earlier “bailout” or “stimulus” measures–that are most likely to welcome tax cuts that actually benefit them, assuming that will represent the bulk of the $300 billion we are talking about.
As for Team Obama’s alleged interest in kowtowing to Mitch McConnell–again, there’s no real evidence to suggest that they’ve made or are willing to make major concessions to get more than a handful of GOP conservatives (which is all they will need if Democrats stick together) on board. Best I can tell, the idea is to move the whole package through the budget reconciliation process, which facilitates big up-or-down votes rather than death-by-amendment. Crafting a package that’s appealing to the public as big, immediate in impact, and focused on both broad national challenges and middle-class pocketbooks is most likely to create the Reagan-1981 dynamic of a coherent “bipartisan” piece of legislation that demands majority support outside and inside Congress. If that’s true, then perhaps the “compromises” supposedly being made in the development of the package are the last, not the first.

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