Oxford University Press's
Academic Insights for the Thinking World

Obama’s Deal with Jon Kyl

By Elvin Lim

Obama is a politician, and that’s why he’s made an estate tax deal with Jon Kyl in return for Kyl’s support for ratifying the START treaty.

As Senator Chuck Schumer has suggested, the Democratic party would probably benefit by allowing the Bush era tax cuts to expire, but this is not what Obama is proposing because he has something up his sleeve.

Consider if Democrats allowed the Bush tax cuts to expire. People would be angry for a few days, but then come 2011, Democrats would be in a better bargaining position to play chicken with Republicans. Democrats would then be able to dare Republicans to stand against tax cuts for the middle class just so that these tax cuts could also be extended to the rich. Democrats are likely to win with themselves framed as the defenders of middle-class tax cuts, and not, as they are now, opponents of tax cuts for the rich.

Consider if Democrats insist on getting a deal before the year ends. Then Republican obstructionism becomes more powerful, and Democrats are more likely to have to blink in a game of chicken. Republicans today are wisely saying that the tax cuts should be extended, and it is not they who are obstructionist, but Democrats. This frame is so powerful that even majority public opinion, which is against the extension of the tax cuts for the rich, has been massaged into oblivion.

In American politics, whoever looks obstructionist ends up looking worst. Right now, it is the Democrats who appear obstructionist, and the frame is in the Republicans’ favor. After the tax cuts expire, it would be Republicans who would look obstructionist, and the frame would be in Democrats’ favor. Put another way: whatever passes in Congress next year would then be called the Obama tax cuts, not the Bush tax cuts and the Democrats would have begun to take back control of the tax issue from the Republicans.

So most Democrats are not in a hurry to pass the tax cuts – that is why they waited so late to even consider the issue, even though they have known for a decade that the Bush tax cuts will expire this year. Indeed, the only reason why Democrats are considering the issue now at the 11th hour is because the president is caving in to Republican requests to do so, for a reason that is entirely his own. This reason is much less noble, and entirely political.

It’s about START. Obama is ceding ground on the tax cuts because he doesn’t really get much credit for revising the tax regime. Other Democrats will share the accolade, and whatever benefits that redound to the economy will come slow and in the future. But if he gets something passed on foreign policy, the benefits accrue almost entirely to him, immediately. For a president worried that unemployment may still be around 9 percent in 2012, a foreign policy achievement would be the fitting antidote.

Who’s against START? Senator Jon Kyl. And who was it that struck a deal with Obama about lowering the estate tax exemption to 3.5 million per individual (and not 5 million) and the tax rate to 35 percent (and not 45 percent), much to the chagrin of House Democrats? Senator Jon Kyl. Indeed, House Democrats are so outraged about this particular provision that they are refusing to even vote on the compromise bill until it is revised. This is the political deal of the year if ever there was a hustle. And it would appear, from the House’s defiance, that some congressional Democrats are not pleased that the president has sold them out.

Is Obama’s commitment to START about national security? In part but not entirely, because the deal with the Russians was made as far back as April this year. The administration had all year to hurry the process up; but it was only after the mid-term “shellacking” that they realized that they better try to achieve something while they can because the next two years look very bleak indeed in terms of securing a positive presidential report card. The political gurus in the White House decided that this was a winnable issue and that it is better to secure something in the bag for which the president could take full credit for than to fight another drawn-out legislative battle (as health-care reform was) for a potential political gain that would have to be shared and diluted among fellow congressional Democrats.

Most Democrats are still giving Obama the benefit of the doubt that he is with them and not for himself, but this deal with Kyl will put this faith to serious test.

Elvin Lim is Assistant Professor of Government at Wesleyan University and author of The Anti-intellectual Presidency, which draws on interviews with more than 40 presidential speechwriters to investigate this relentless qualitative decline, over the course of 200 years, in our presidents’ ability to communicate with the public. He also blogs at www.elvinlim.com and his column on politics appears here each Tuesday.

Recent Comments

  1. hsr0601

    1. Future lies in Education & Energy.
    I guess the economic boom in the Clinton-Gore administration was linked to the third wave of IT industry, rather than the triangulation he pulled off.
    ( And he didn’t sell out his core value regarding tax, and so on. )
    The forth wave of ET industry, likewise, lies ahead, CA starts to reap the benefits. Regrettably, the reps stand in the way of it.
    2. Guess who will have to foot the bill eventually for paying off the rich ?
    The rest of folks.
    Wait until the new Congress comes back in 2011 and start looking for ways to cut spending to pay for all this $900 billion. They won’t target things that affect corporations or the rich, the entire tab will cost the middle class and the elderly. Social security, Medicare, social services, education, will all be impacted.
    3. A one-year reduction in the payroll tax from 6.2 to 4.2 percent will give the reps chance to fight its restoration, endangering Social Security, which the conservative movement has long sought to eradicate.

    4. Currently, American businesses are sitting on approximately $2.3 trillion in reserves, which, of course, could be used to create jobs.
    For instance, hospitals have serious problems with understaffing, not because of the financial squeeze, but because of the cost reduction.
    ( And the understaffing could spark prohibitive ER visits. )
    In an attempt to defend the prodigious windfall, they resort to using the term of socialism or socialists for reformers.
    5. Let me repeat :
    Extreme Capitalism failed entirely in 2008.
    From my perspective, Communism & Extreme Capitalism have several characteristics in common :
    (a). Power First, Corruption at the cost of ordinary people !
    (b). They hate competition, accordingly there is no progress.
    6. Presently, another Bush-era is threatening health care law.

Leave a Comment

Your email address will not be published. Required fields are marked *