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The New RepublicLast summer, John Podesta, the Clinton ex-chief of staff who runs the influential Center for American Progress, became alarmed at the lack of pushback against the Bush tax cuts. To goad the administration into action, he organized a debate between Treasury Secretary Timothy Geithner and Douglas Holtz-Eakin, a former adviser to John McCain. Podesta’s gambit was only a partial success. Geithner, who’d previously weighed in on the issue, joined the campaign to bury the upper-income cuts when they expire in January. But, except for one forceful speech in September, the president stayed mostly on the sidelines.The missteps that led to the likely two-year renewal of the Bush tax cuts highlight the danger in the White House’s aversion to course corrections. Obama did extract more concessions (pending congressional approval) than recently thought possible, like a one-year payroll-tax cut and a 13-month extension of unemployment benefits. These will boost the economy and help him politically. But the cost, a hundred-billion-dollar-plus gift to the rich, is tough to accept at a time when the deficit cries out for shearing and when the money would be far better spent on further stimulus.
Within the administration, the split over whether to mount a tax-cut offensive broke down largely along wonk-operative lines. The wonks spent the last year mystified that the White House was ducking the fight when the substantive merits were so one-sided. The operatives brooded that the politics could abruptly turn against them, despite polling showing little public appetite for the upper-income cuts. “They view it through the class warfare stuff—Kerry in 2004, Gore in 2000,” says one administration official. “They worry that they’ll get painted as lefties, tax-raisers.”
At key moments, including one internal discussion this spring, the political team declined to make a concerted push before Election Day. “The political people were like, ‘It’s a mess, let’s not deal with it now,’ ” says another official involved. (In fairness, the wonks were divided on policy details even as they all favored a quick resolution. A White House spokesperson says the congressional math made the discussion academic: “The Senate didn’t have the votes.”) This created the post-election predicament, in which the GOP could filibuster any less-than-complete extension, betting that the public would blame Obama if the rates reset in January. Such was the frustration among the wonks that, when asked to explain their tax-cut strategy, they’d morbidly joke that there was no strategy, just an “approach.”
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