White House and Senate GOPers close in on deal to temporarily extend all the Bush tax cuts in return for an extension on jobless benefits… How did we get here? Two explanations: 1) the votes aren’t there for Democrats, and 2) the economy is worse off than they probably expected it would be a year ago… Question for Dems: Do they fight on these tax cuts or try to get things done in the lame duck?... Another question: Why didn’t they try to work on the Bush tax cuts six months ago?... And get this: Extending the Bush tax cuts, jobless benefits, and other tax cuts for two years will likely cost more than the stimulus did… Obama discusses the economy at 12:20 pm ET in Winston-Salem, NC… And the end is nearing in Minnesota’s gubernatorial recount.
*** Done deal? Today’s New York Times reports that the Obama White House and Senate Republicans are closing in on a deal to temporarily extend the Bush tax cuts for all income levels -- for two years perhaps? -- in return for also extending jobless benefits and the Obama middle- class tax cuts from the 2009 stimulus. The deal could happen this week. As NBC’s Savannah Guthrie noted on “TODAY,” senior administration officials said President Obama has threatened to oppose even a temporary extension of the Bush tax cuts unless unemployment benefits and other target tax cuts are also included. And it appears that Senate Republicans are more than open to that deal. “I think we will extend unemployment compensation,” Senate GOP Leader Mitch McConnell said on “Meet the Press” yesterday. By the way, the deal appears to be more done than folks realize, but the issue continues to be the White House selling it to congressional Democrats, which will take place tomorrow on Capitol Hill when the parties hold their caucus meetings.
*** How we got here: So how did we get to the point where Obama is about to break one of his biggest campaign promises in extending the Bush tax cuts for the wealthy? First, the votes weren’t there for Democrats. On Saturday, Senate Republicans -- assisted by a handful of Democrats -- filibustered two amendments that would have 1) extended the Bush tax cuts only for those making less than $250,000 and 2) extended them for those making less than $1 million. And if Democrats don’t have the votes now, they certainly won’t have them next year when the next Congress convenes. Second, the employment situation is worse off than anyone would have expected a year ago, and that has put an enormous amount of pressure on Democrats not to change the current tax policy, even if the facts don't necessarily fit the narrative that tax cuts create jobs. If the economy was creating 200,000 to 300,000 jobs per month -- instead of the 39,000 in November -- Democrats would have a stronger argument to let the cuts expire. Now? “We don't want to take actions this year that will affect this year's spending and this year's taxes in a way that will hurt the recovery,” Fed Chairman Ben Bernanke said last night on “60 Minutes.”
*** Fighting vs. getting things done: Of course, as Paul Krugman advises, President Obama could draw a line in the sand and threaten to veto any legislation that cuts taxes for the wealthy -- either in this lame duck or next year. But in addition to opening himself up to the charge of raising taxes in a struggling economy, that action would also imperil all the other items on Obama’s to-do list: jobless benefits, “Don’t Ask, Don’t Tell” repeal, and ratification of New START. A question for Democrats: Would getting those priorities through the lame duck be worth caving in on the Bush tax cuts? On Sunday, Indiana GOP Sen. Dick Lugar said the votes are there to pass New START. And on Friday, GOP Sen. Scott Brown said he backs DADT repeal, which improves the likelihood of that happening. And then there’s this: Is December -- when few Americans are really paying attention -- really the time to draw a line in the sand and fight?
*** Why didn’t congressional Democrats work on this six months ago? Here’s another question for Democrats, especially those on Capitol Hill who are upset that they seem to be caving in on the Bush tax cuts: Why didn’t they work on this last spring/summer, when they might have had a stronger hand to play? As the Times says, “In meetings with administration officials after the Senate votes, the House speaker, Nancy Pelosi, and many other House and Senate Democrats voiced deep unhappiness at the prospect of extending all the tax cuts and also expressed their belief that the White House did not appear to be getting enough for such a big concession.” It was the Capitol Hill Dem leadership -- more than the White House -- that pushed for putting off any votes on the Bush tax cuts. At the time, it was about trying to insulate some vulnerable Democrats from votes on taxes. Talk about short-sighted leadership decisions.
*** Bigger than the stimulus? And here’s something to chew on: Extending the Bush tax cuts for two years -- along with extending jobless benefits and targeted tax cuts -- would likely cost more (approximately $1 trillion) than the stimulus cost (approximately $800 billion). Here’s our back-of-envelope math arriving at the $1 trillion approximation: If the price tag of extending the Bush tax cuts over 10 years is nearly $4 trillion, then doing it for two years is some $800 billion. And extending the jobless benefits and targeted tax cuts raises that price tag even higher.
*** Obama’s day: Today, at 12:20 pm ET, President Obama gives a speech on the economy in Winston-Salem, NC. Per NBC's Athena Jones, this is Obama's fifth trip to the Tar Heel State since becoming president.
*** The end is near in Minnesota: “The first stage of Minnesota’s gubernatorial recount ended Friday as Hennepin County finished hand tallying roughly 470,000 ballots cast on Election Day and joined the state’s other 86 counties in taking a breather before the State Canvassing Board meets this week,” Minnesota Daily writes. “Republican Tom Emmer still trails DFL opponent Mark Dayton by 8,675 votes.” http://bit.ly/fHNH1c