Obama’s Immaculate Concession?
The White House may be warming to the idea of using tax cuts to boost the U.S. economy. It’s a possible plan that could have scored loads of Republican votes had it been proposed in early 2009. But with the president’s popularity falling and congressional elections looming, support won’t be so easy to coalesce.
The Democrats must contend with a political crisis along with the possibility of another economic one. The November midterms could cost them losses on a scale of the 1994 defeats when Republicans took both the House and Senate. A Reuters-Ipsos survey shows more people now disapprove than approve of President Barack Obama’s job performance by 52 percent to 45 percent. And the GOP leads on issues such as the economy, spending and jobs in a new Gallup poll.
Not surprisingly, the administration would like to make a bold move on the economy. GDP growth has been decelerating, and unemployment seems stuck at close to 10 percent. But with Republicans blocking even a $30 billion small business lending proposal on Capitol Hill, more grandiose ideas seem like nonstarters.
On the surface, at least, tax breaks seem like potential logjam-breakers. Republicans already wants to extend all the 2001 and 2003 Bush cuts without paying for them. And cutting payroll taxes, an idea favored by many conservatives 18 months ago, may be one of the options the White House is examining. The approach makes some economic sense. The Congressional Budget Office ranks payroll tax cuts as one of the top ways to create jobs.
But the opposing philosophies haven’t yet gelled. The White House is still insisting on higher taxes for wealthier Americans, even though many Democrats are willing to extend those rate reductions. And Republicans are unlikely to go along with any plan that raises any taxes in 2010 – and they’re in position to just stall until 2011.
As it is, some critics are already calling Obama’s potential tax-cut embrace the “Immaculate Concession.” A really bad jobs report or a market plunge could help the two parties find common ground. But absent that, even tax cuts probably stand little chance in a hopelessly gridlocked Congress.