President Obama announced yesterday that he had worked out a deal with Republican leaders in Congress on taxes and unemployment compensation. The deal would extend all of the Bush-era income tax rates for two years, provide extended unemployment compensation for another 13 months, and reduce payroll taxes for a year, among other components.
The Bush-era tax cuts expire on December 31, so the deal needs to make it through Congress promptly. There is some question about whether the “grand compromise” will be sufficiently well received — particularly among President Obama’s liberal base — to be passed in the lame duck Congress. The concept of extending “tax cuts for the rich” is anathema to them, and they feel like President Obama weakly gave up far more to Republicans than he got in return.
It would not be at all surprising if there were many Democratic defections when votes are taken on the legislation needed to implement the proposed deal. I know that Richard, for one, is so infuriated by the concept of extending the current tax rates for individuals earning more than $250,000 that he didn’t even want to talk about it at the dinner table last night. I’m confident that many liberal Democrats share his disgust — and, more and more, the disgust is directed at the President. If the deal does pass, we will see a significantly different political dynamic in 2011 than existed in 2010. Not only will conservative Republicans control the House of Representatives, liberal Democrats will be increasingly likely to criticize President Obama as a sell-out who cannot play hardball with Republicans.