There really is no other way to say it: the Republicans won, the liberal Democrats lost, and the president sided with the Republicans. The subject, of course, is an agreement to extend all the Bust tax cuts. The president tonight announced a "bipartisan framework" for agreement on, among other things, to extend the Bush tax cuts for two years. A Republican House aide tells me tonight it is "a damn good deal." And so it is, from the perspective of conservatives. As they've been demanding, all of the Bush tax cuts are extended for two years. The estate tax that was due to pop back up to a rate of 55 percent was retained, but with a $5 million exemption and at a rate of 35 percent (better than Republicans privately expected). For that huge concession, the president extracted... a 13 month extension in unemployment benefits.
Now it's true that the deal includes a one-year payroll tax cut of 2 percent. Plus other tax credits -- the earned income credit, the child tax credit and the newly-created college credit -- all remain in place. And businesses will be allowed to expense 100 percent of their purchases for equipment. Liberals and White House spinners will argue that the White House "wanted" many of those tax credits and breaks, but in point of fact the Republicans didn't mind giving more tax breaks. It sounds better to slide those items into the White House's column, but really the only concession by the Republicans was on extension of the unemployment benefits.
So you can see why liberals are morose. A Capitol Hill aide described Sen. Majority Leader Harry Reid's demeanor upon returning from the White House: "He looked like someone shot his dog."
To say that Republicans are triumphant would be an understatement. They won the philosophical point (tax hikes impede economic growth) and, candidly, are more than delighted to have a repeat of this debate for the presidential campaign in 2012. Ryan Ellis of Americans for Tax Reform, which strenuously pushed for extension of the Bush tax cuts, tells me,"If 2012 is a referendum on Obamacare and tax hikes, we win." Well, there will be lots of other issues, and 2012 in political terms is a long way off. Still, I see his point.
In public, Republicans were more restrained. Sen. Minority Leader Mitch McConnell issued a statement that read:
"I appreciate the determined efforts of the President and Vice President in working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth. Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work. Members of the Senate and House will review this bipartisan agreement, but I am optimistic that Democrats in Congress will show the same openness to preventing tax hikes the administration has already shown."
Translation: the White House sided with the Republicans. And it was Democratic gloomy faces all around. The president looked solemn as he announced the deal. Reid pointedly refused to endorse the deal; his spokesman issued a statement that Reid would have to consult with his fellow Democrats. One Senate adviser said that the party caucus meeting tomorrow should "be interesting." We'll have much more tomorrow.
