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Tax cuts: No deal better than bad deal

I’ll bet you didn’t know that the mayors of Detroit, Philadelphia, Charlotte, St. Louis, Cincinnati, Oklahoma City, Los Angeles and Columbus, Ohio – as well as the governors of Kansas, Wisconsin, Michigan, Oklahoma and Florida – supported the tax-cut deal President Obama negotiated with Republicans.

The only reason I know is because of the White House’s aggressive sales pitch on the president’s tax compromise: pumping out multiple statements daily from economists, pundits, mayors, governors, and members of the House and Senate in support of the plan. President Obama himself has defended it at least three times to reporters.

Members of the White House Press Corps agree: It’s the strongest fight the Obama White House has put up on any issue so far. Too bad they’re spending so much energy on such a bad deal.

Even the president admits that his compromise, like every other compromise, is imperfect. But this one is particularly odious because it gives away too much for too little.

What the president gives Republicans is their “holy grail,” a two-year continuation of Bush tax cuts for the wealthiest of Americans – as well as a $5 million per individual exemption and a big cut in rates for the estate tax. What he gets from Republicans in return is a 13-month extension of unemployment benefits. In addition, the president secured a two-year cut in the payroll tax and continuation of several targeted tax cuts for middle-class families contained in the original stimulus package.

Liberal Democrats in Congress are up in arms over the tax-cut deal. And rightfully so. Because, for starters, the president is breaking his campaign promise to end George Bush’s tax cuts for the rich as soon as feasible. But it’s worse than that. He’s also allowed Republicans to demand continued tax cuts for the upper 2 percent of Americans in return for any extension of unemployment benefits for those hardest hit by this recession. This is a moral outrage. As if the only way to get help for the poor is to throw Donald Trump another tax break.

In response, President Obama accuses “purist” liberal Democrats of being unwilling to compromise in order to get things done. That’s not true. Liberals have already bent over many times for Obama: on the public plan option, on don’t ask, don’t tell, on the Employee Free Choice Act, on Afghanistan and on failure to prosecute war crimes, among other issues. For liberals, this is just one capitulation too many – especially because the arguments against upper-income tax breaks are so strong. And nobody’s made that case better than Obama himself.

The president argues that extending tax cuts for the rich would require going hat in hand to the Chinese and borrowing another few hundred billion dollars. With the United States facing a $1.4 trillion deficit and a $13.7 trillion national debt, that is fiscal insanity.

Indeed, that’s why the Bush tax cuts were only adopted on a temporary basis, back in 2001: because we were then enjoying a surplus. In case of a deficit, Bush and others promised, we could easily go back to the higher rates. But, of course, that never happened.

Obama also rebuts the charge that letting those tax breaks expire would wreck the economy. Nonsense. It means only that the top rate for well-to-do Americans, on taxable income over $250,000, would go from today’s 35 percent back to 39 percent: the same rate the top tier paid under Bill Clinton, when this country enjoyed the longest period of economic growth on record and created 20 million new jobs.

There was, in fact, no need to make this deal. A better option would have been to require Republicans to conduct a real filibuster in the Senate, and then force them to vote up or down on extending tax cuts for the middle-class only – which even John Boehner pledged to support. True, if that failed, there may not have been a deal. But no deal’s better than a bad deal. And at least Democrats would have put up a good fight. Instead, Obama caved in before the fight began.

Obama insists the fight’s not over. It’s just delayed two years, when he promises an all-out battle to get rid of tax breaks for the rich. I’d like to believe it, but if Obama wasn’t willing to fight now, why believe he’ll fight the good fight in 2012?