Get Ready for a Tax Hike

Written by David Frum on Monday September 20, 2010

Most Americans assume that Obama and the GOP will reach an agreement on renewing the Bush era tax cuts. Lately though that outcome looks like wishful thinking.

Most Americans assume that Obama and the GOP will soon reach an agreement on renewing the Bush era tax cuts. However, as my latest column for CNN.com argues, that outcome is beginning to look like wishful thinking.

Last weekend, Republican House leader John Boehner offered the anticipated compromise. He told CBS's Bob Schieffer on Face the Nation that he would accept a middle-class-only tax cut if he had no other choice. What happened? Let Bob Schieffer tell it:

"By mid-afternoon [Sept. 12], the White House acknowledged Boehner's change in position, but added in a written press release: 'Time will tell if his actions will be anything but continued support for the failed policies that got us into this mess.'

"Blame it on a long memory, but I can remember when the first move by a president like Lyndon Johnson or maybe a smart aide in the Eisenhower White House would not have been a snarky press release.

"I'm guessing LBJ would have been on the phone to Boehner in five minutes after seeing him on TV, saying something like, 'If you're serious, why don't you come over here quietly and we'll try to work out something good for both of us and the folks out there?'"

Schieffer astutely diagnosed this reality: President Obama's Democrats do not want a tax compromise. They are looking at polls that purport to show the unpopularity of extending tax cuts for those families earning $250,000-plus. Facing a desperate political situation, they have seized this issue as their last hope of rescue.

Here's the Democratic hope: The goal is not to pass a middle-class-only tax cut before January. The goal is to maneuver Republicans into opposing a middle-class-only tax cut before November. Democrats will gain an issue, maybe save some seats in Congress.

It won't work. The public will ignore the maneuverings, the Democrats will still lose big -- and time will have been wasted. The day after the election, we'll be less than two months away from the tax cuts' expiration, but further than ever from a deal.

Post-election, Republicans will have less incentive to deal. If they wait until January, they'll have much more clout, perhaps a majority in one or both houses of Congress. So they'll want to wait.

But when the new Congress reconvenes in January, time will be tight -- and moods will be angry. The new Republican caucus will be bigger, but also more militant, less willing to deal. The compromise John Boehner offered in September has been severely criticized by many Republicans in Congress -- and may not be available in January, even assuming Boehner becomes House speaker.

By then, President Obama will be thinking hard about his own re-election, looking for issues to sharpen the contrast with the GOP -- maybe force them into a confrontation they might lose, as they lost the government shutdown in 1995. Tax cuts for the rich may seem the perfect issue over which to force a confrontation.

Whatever the two parties think, by January we'll be out of time.

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