By Shailagh Murray Washington Post Staff Writer
Friday, December 10, 2010; 12:00 AM
The newly appointed Senate Democratic “message” guru has emerged as the White House’s chief antagonist over the tax cut deal Obama worked out with GOP leaders.
To Schumer (N.Y.), Obama’s decision to accept a two-year extension of all the tax cuts enacted by President George W. Bush – even at the highest income levels – is a needless capitulation to resurgent Republicans. Schumer wanted the president to push harder to extend the tax cuts, set to expire at year’s end, only for middle-class families.
But to the White House, it is Schumer who is acting recklessly by seeking to wage class warfare with just days left on the legislative calendar, risking the health of the economy and the pocketbook of every middle-class household with his threat to carry the fight into next year.
The contentious, mostly private standoff has turned Schumer into an unlikely villain among administration officials who have long valued his tactical skills and political acumen. It has also made him an unlikely champion to liberal activists who are seething at the Obama deal. In an appeal this week to supporters, the liberal group Moveon.org praised Schumer, a long-time ally of Wall Street, as one of their “progressive heroes” and saying “we need you now.”
Obama views the fate of the Bush breaks as chiefly an economic question, and to him, the answer is clear: The sputtering recovery can’t withstand any tax increases. The White House also hopes cutting a deal with Republicans will help to clear away some GOP opposition to additional stimulus spending the president wants to enact and to the ratification of the New START nuclear arms treaty with Russia.
By Felicia Sonmez
Texas Republican Rep. Ron Paul is poised to chair the House Domestic Monetary Policy Subcommittee, putting the gavel of the panel overseeing the Federal Reserve into the hands of one of the central bank’s most outspoken critics.
Rep. Spencer Bachus (R-Ala.), the incoming chairman of the House Financial Services Committee, announced Thursday that Paul will head the subcommittee when Republicans assume the majority in the 112th Congress.
“This is the leadership team that crafted the first comprehensive financial reform bill to put an end to the bailouts, wind down the taxpayer funding of Fannie Mae and Freddie Mac, and enforce a strong audit of the Federal Reserve,” Bachus said in a statement, adding that the committee’s “first priority is to end the taxpayer funded bailout of Fannie and Freddie.”
On Wednesday, a group of about 30 tea party-aligned groups wrote a letter urging Bachus and House Speaker-designate John Boehner (R-Ohio) to support Paul’s bid for subcommittee chairman. The letter was in response to reports that GOP leaders were mulling ways to block Paul from becoming chairman over concerns that his views are too radical.
In the letter, the groups warned that the “implied message” of blocking Paul would be “one of indifference towards the concerns of those who helped put the Republican Party back in the majority.”
Paul has been a harsh critic of the Federal Reserve and has pushed for measures that would audit the central bank or abolish it altogether. The subcommittee also has jurisdiction over “precious metals,” and Paul has advocated a return to the gold standard.
By Felicia Sonmez | December 9, 2010
Does President Obama like or loathe the two-year tax deal he has struck with Republicans? It was hard to tell from his grudging, testy remarks Monday and yesterday, but perhaps that’s because he realizes he is repudiating the heart and soul of Obamanomics as the price of giving himself a chance at a second term.
In accepting the deal to cut payroll and business taxes and extend all of the Bush-era tax rates through 2012, Mr. Obama has implicitly admitted that his economic strategy has flopped. He is acknowledging that tax rates matter to growth, that treating business like robber barons has hurt investment and hiring, and that tax cuts are superior to spending as stimulus. It took 9.8% unemployment and a loss of 63 House seats for this education to sink in, but the country will benefit.
In this sense, the political symbolism is as important as the policy. Mr. Obama is signaling that businesses must be encouraged to make profits again so they can hire more workers, that “the rich” he so maligns should be able to keep more of what they earn, and even that wealth built up over a lifetime shouldn’t be confiscated wholesale at death. In policy if not in Presidential rhetoric, class war and income redistribution are taking a two-year holiday.
This is not to say the deal is optimal for economic growth, and Republicans should not pretend it is. A two-year reprieve is far better than an immediate tax increase amid a still fragile recovery, but it also means that the policy uncertainty is carried forward. In the Keynesian universe, “temporary” tax cuts are virtuous because they stimulate immediately while ostensibly allowing government to reclaim the revenue later when the economy is stronger.
In the real world, businesses make investments based on the estimated return on capital over time, including the expected tax rate. What matters is the overall cost of, and return on, capital. The temporary nature of the tax cuts will provide less incentive to invest than would permanent reductions in the cost of capital.
A couple earning $80,000 could lose hundreds per month if the Bush tax rates aren’t extended.
By KARL ROVE
After ignoring congressional Republicans for 22 months and 10 days, President Obama hosted a “come together, right now” session with them Tuesday. The topic: the Bush tax cuts—on income, capital gains and dividends—that are set to expire at the stroke of midnight, Dec. 31.
The atmospherics at the White House on Tuesday were good, but the meeting isn’t likely to produce a quick agreement on substance. A lot of attention has been paid to congressional Republicans, whose strong desire to preserve the Bush rates is apparent. Less attention has been paid to the Democrats—among whom there is no consensus about what to do.
OpinionJournal.com Columnist John Fund on the tax debate within the Democratic caucus, and on the fight for key committee chairmanships in the House.
Thanks to her dogmatic rigidity and unquenchable passion for class warfare, House Speaker Nancy Pelosi continues insisting on extending the Bush tax cuts only for those who make less than $250,000. Mrs. Pelosi doesn’t have the votes to pass her proposal using a special House rule, the suspension calendar, which requires a supermajority and does not permit amendments. She might well lose if the bill proceeds through normal House rules—Democrats could join with Republicans to offer an amendment allowing an up-or-down vote on extending all the Bush-era tax cuts, which could pass.
Even if Mrs. Pelosi’s measure cleared the House, Senate Majority Leader Harry Reid has apparently signaled it can’t pass the Senate. All 42 Republican senators support extending all Bush-era tax cuts, depriving Mr. Reid of the 60 votes needed to invoke cloture. And there are Senate Democrats who also oppose raising taxes.
Since neither Mr. Obama nor Mr. Reid seem willing to force her to back down, Congress could go home without stopping the largest tax increase in the nation’s history.
Tags: A Threat To America·All About the Money·Disillusioned Government·Empty Promises·Government Circus·Government Incompetence·Something To Hide·Throw Out The Constitution·Wasteful Spending·Where did the money go?
By Anne E. Kornblut Washington Post Staff Writer
Sunday, November 14, 2010; 12:41 AM
After nearly two weeks of introspection, President Obama‘s top advisers have concluded that the “shellacking” Democrats took on Election Day was caused in large part by their own failure to live up to expectations set during the 2008 campaign, not merely the typical political cycles and poor messaging they pointed to at first.
While the president has been on a trip to Asia for the past 10 days, all but a few of his top aides stayed behind to figure out what went so wrong and what to do about it. Wearing casual clothes and with the White House to themselves, they determined that the situation they face is serious and will take significant adjustments to reverse.
The advisers are deeply concerned about winning back political independents, who supported Obama two years ago by an eight-point margin but backed Republicans for the House this year by 19 points. To do so, they think he must forge partnerships with Republicans on key issues and make noticeable progress on his oft-repeated campaign pledge to change the ways of Washington.
Even more important, senior administration officials said, Obama will need to oversee tangible improvements in the economy. They cannot just keep arguing, as Democrats did during the recent campaign, that things would have been worse if not for administration policies.
Tags: Disillusioned Government·Empty Promises·Government Circus·Government Incompetence·Making History Tops Ethics·Obama-Nation·Power Hungry·Reality Check·Something To Hide·Throw Out The Constitution·Wasteful Spending
By Joe Davidson Washington Post Staff Writer
Thursday, November 11, 2010; 7:12 PM
If federal employees didn’t read the handwriting on the wall when Republicans won the House last week, they shouldn’t miss the red lights that began flashing with the release of sweeping proposals to rectify the nation’s finances.
The recommendations, by Alan K. Simpson, a former Republican senator from Wyoming, and Erskine Bowles, who served as White House chief of staff in the Clinton administration, would hit federal employees hard, freezing their pay and reducing their numbers.
Everyone, inside and outside of government, would take a blow under their controversial suggestions. And the proposals are by no means final. The draft documents released Wednesday by Simpson and Bowles, co-chairmen of the bipartisan National Commission on Fiscal Responsibility and Reform, represent only their ideas. There’s no guarantee the commission will adopt their plan in the panel’s final report, which requires approval by at least 14 of the 18 members. Some members of Congress wasted no time in blasting the blueprint.
Yet the report indicates a shift in the atmosphere surrounding the federal workforce. With their bipartisan pedigree, offered by two men who aren’t gunning for quick headlines, the draft proposals give an increased level of support and legitimacy for some of the points Republicans have made about federal pay and staffing.
For months, GOP lawmakers have called for cutting or freezing the size of the federal workforce and employees’ compensation. These calls have fueled an image of bloated, budget-busting feds that sharply conflicts with the public service motivation that really drives them, especially those who could earn much more in the private sector.
By N.C. Aizenman Washington Post Staff Writer
Tuesday, November 9, 2010; 12:52 AM
Republicans’ consolidation of power in state capitols is likely to expand the number of states that employ a far more limited, free-market-oriented approach to implementing the nation’s new health-care law than the robust regulatory model favored by its supporters.
Although the law is a federal statute, it tasks states with administering many of its most important provisions and grants them considerable leeway.
It is up to states to run markets, known as “exchanges,” through which individuals and small businesses will be able to buy health insurance plans, often with federal subsidies, beginning in 2014. States will also oversee a mostly federally funded expansion of Medicaid to cover a far larger share of the poor.
Many incoming Republican governors made their antipathy to the law a plank of their campaigns. Tennessee Gov.-elect Bill Haslam denounced it as “an intolerable expansion of federal power.” Wyoming Gov.-elect Matt Mead promised to join 21 states contesting its constitutionality in federal courts. And Maine, one of the first states to set up a task force to implement the law, will now be led by Paul LePage, a tea-party favorite who vowed to work against the legislation and predicted that voters would soon see headlines about him telling President Obama to “go to hell.”
Such state leaders cannot completely block implementation of the law: If they are unwilling or deemed unready to run an exchange by 2014, the legislation empowers the federal government to step in with its own version. But the law does grant states a fair amount of discretion.
Tags: Taking Back America
By Lori Montgomery – Washington Post Staff Writer
Sunday, November 7, 2010; 11:16 PM
President Obama said a Republican proposal to preserve the full array of Bush administration tax cuts for two more years presents a “basis for conversation” that could lead to a compromise as lawmakers prepare to meet next week for a high-stakes showdown over taxes.
However, a senior House Republican on Sunday flatly rejected the option most favored by the White House: decoupling the Bush tax cuts that benefit the wealthy from the cuts that benefit the vast majority of Americans by extending each set of provisions for a different period of time.
“No, I am not for decoupling the rates,” Rep. Eric Cantor (R-Va.), the No.2 Republican in the House, said on “Fox News Sunday.” He echoed the GOP argument that such a move virtually would guarantee the eventual expiration of tax breaks in the upper brackets, where some of the most successful small businesses pay taxes.
“I am not for raising taxes in a recession, especially when it comes to the job creators that we need so desperately to start creating jobs again,” Cantor said. “I am not for sending any signal to small businesses in this country that they’re going to have their tax rates go up.”
The comments highlighted the shifting political landscape in the wake of a Republican landslide in last week’s midterm elections. Obama, who has argued strenuously that the nation cannot afford to keep the tax cuts for millionaires, has been adopting a conciliatory tone in recent days in hopes of reaching a deal with resurgent Republicans to prevent all the cuts from expiring on schedule — an outcome that would sharply increase IRS withholding in January for virtually every American taxpayer, including the middle-class families Obama has sworn to protect.
“My number one priority coming into this is making sure that middle class families don’t see their tax rates go up January first,” Obama said in an interview with CBS’ “60 Minutes” set to air Sunday night.
By Karen Tumulty and Dan Balz Washington Post Staff Writers
Sunday, November 7, 2010; 12:46 AM
President Obama‘s failure to channel the anxieties of ordinary voters has shaken the faith that many Democrats once had in his political gifts and his team’s political skill.
In his own assessments of what went wrong, the president has lamented his inability to persuade voters on the merits of what he has done, and blamed the failure on his preoccupation with a full plate of crises.
But a broad sample of Democratic officeholders and strategists said in interviews that the disconnect goes far deeper than that.
“There doesn’t seem to be anybody in the White House who’s got any idea what it’s like to lie awake at night worried about money and worried about things slipping away,” said retiring Tennessee Gov. Phil Bredesen (D). “They’re all intellectually smart. They’ve got their numbers. But they don’t feel any of it, and I think people sense that.”
Bredesen had voiced such reservations long before the election, but more Democrats are saying the same thing after Tuesday’s defeats – although few are willing to cross the White House by doing so publicly.
Obama “is not Bill Clinton in the sense that he’s not an extrovert. He doesn’t gain energy by connecting with people,” said a Democratic strategist, who worked in the Clinton White House and asked not to be named while offering a candid criticism. “He needs to be forced to do it, either by self-discipline or others. There’s no one around him who will do that. They accommodate him, and that is a bad thing.”
William A. Galston, a Clinton White House policy adviser who is now a senior fellow at the Brookings Institution, said the midterm election revealed what had always been a “missing middle” to the Obama campaign message.
“Hope is a sentiment, not a strategy, and quickly loses credibility without a road map,” Galston wrote in a paper released two days after the election. “Throughout his first two years in office, President Obama often struggled to connect individual initiatives to larger purposes.”
With the public skeptical of and even hostile to his biggest accomplishments, including the economic stimulus package and the health-care overhaul, Obama fell back on a plea to voters not to turn back to failed Republican policies. That appeal “just missed what was happening with the country and with people,” said Democratic pollster Stan Greenberg.
Still, Democrats remain divided between their moderate and liberal wings over whether the president should continue to push hard with his agenda or move to the center to try to accommodate the Republicans in Congress.