House Democrats committed a mini rebellion against the White House yesterday, mocking Barack Obama with chants of "Just say no," as they committed to trying to work for a better deal than the tax cut plan proposed on Monday night between the President and Senate Minority Leader Mitch McConnell.
Reports are a bit different on the Senate's side, where, thanks to some "sweeteners," the Democratic led chamber apparently is leaning towards passing the bill, perhaps as early as Monday night.
But this is where we have to look at what those "sweeteners" consist of: a program that provides cash grants for wind and solar projects, and a one-year extension of a 45-cent-a-gallon tax credit for fuel made from ethanol, a provision, the Wall Street Journal's Janet Hook reports, that was sought by many farm-state lawmakers.
Among those farm-state lawmakers is Nebraska's Ben Nelson. You remember Nelson and his demands from exactly a year ago, as the White House and Harry Reid were loading all types of pork on to the federal health care reform bill to persuade demanding centrists like Nelson and Louisiana's Mary Landrieu (who could forget the "Cornhusker kickback" or the "Louisiana Purchase") to come aboard.
Now obviously there's a lot in the package that is unsavory to everybody, regardless of your political persuasion. But wasn't one of the loudest chants we heard from critics of the health care law was the process as much as the content?
Corn based ethanol, to say the least, is a questionable fuel. Currently, the subsidies on it are scheduled to expire on December 31, just as all of the Bush-era tax cuts.
17 Senators have said they should die out. If they are extended, they will (according to the NY Times) cost taxpayers $31 billion over the next five years.
This is what's going to bring the Great Compromise over the finish line?
House Democrats are seething of course at what they call the capitulation by President Obama. However, the fact of the matter is, there will be 63 less of them walking the halls of Congress in the next few weeks. President Obama is keenly aware of this, as he tries to pivot forward and start winning back independents behind his presidency.
Arguments can and have been made all week about how good or bad the deal is. In this morning's New York Times, columnist Paul Krugman says there's actually a lot in the bill that he does like – however, he accurately reports that the "not-so-bad stuff" that Obama insisted upon putting in the legislation expires a year from now, while extending the more odious tax cuts for the wealthy goes for two more years – not really a great deal.
This has big political implications. Political scientists tell us that voting is much more strongly affected by the economy’s direction in the year or less preceding an election than by how well the nation is doing in some absolute sense.
When Ronald Reagan ran for re-election in 1984, the unemployment rate was almost exactly the same as it had been just before the 1980 election — but because the economic trend in 1980 was down while the trend in 1984 was up, an unemployment rate that spelled defeat for Jimmy Carter translated into landslide victory for Reagan.
This political reality makes the tax deal a bad bargain for Democrats. Think of it this way: The deal essentially sets up 2011-2012 to be a repeat of 2009-2010. Once again, there would be initial benefits from the stimulus, and decent growth a year before the election. But as the stimulus faded, growth would tend to stall — and this stall would, once again, come in the months leading up to the election, with seriously negative consequences for Mr. Obama and his party.
This article appears in Dec 9-15, 2010.