The Tax Deal

Sully on the Obama tax deal.

And notice that Obama has secured - with Republican backing - a big new stimulus that will almost certainly goose growth and lower unemployment as he moves toward re-election. If growth accelerates, none of the current political jockeying and Halperin-style hyper-ventilation will matter. Obama will benefit - thanks, in part, to Republican dogma. So here's something the liberal base can chew on if they need some grist: how cool is it that Mitch McConnell just made Barack Obama's re-election more likely? Bet you didn't see that one coming, did you?

The mix of policies is also shrewd from a strategic point of view.

At some point, I suspect, the Congress will have to decide between extending the payroll tax holiday or keeping the Bush tax cuts for millionaires - the double-track of the current Keynesian deal. I think Obama wins on that one, and has set up the kind of future choice the GOP really doesn't want to make. What he has done, in other words, is avoid an all-out fight over short-term taxes and spending now in the wake of a big GOP victory in order to set up the real debate about long-term taxes and spending over the next two years, leading into a pivotal 2012 election that could set the fiscal and political direction of this country for decades, an election in which he may well have much more of an advantage than he does now.

This is the difference between tactics and strategy. The GOP has won again on tactics, but keeps losing on strategy. More broadly, as this sinks in, Obama's ownership of this deal will help restore the sense that he is in command of events, and has shifted to the center (even though he is steadily advancing center-left goals). It's already being touted as "triangulation" by some on the right even as it contains major liberal faves - unemployment insurance for another 13 months, EITC expansion, college tax credits, and a pay-roll tax cut.

My view is that if this deal is a harbinger for the negotiation Obama will continue with the GOP for the next two years, he will come into his own.

The more his liberal base attacks him, the more the center will take a second look. And look how instantly the GOP's position has shifted. They have suddenly gone from pure oppositionism to dealing with the dreaded commie Muslim alien, thereby proving he is not what they have made him out to be. The more often we get the GOP to make actual tangible decisions on policy alongside Obama, the less able they will be able to portray him as somehow alien to the country, and the more they will legitimize him. Their House victory means they can no longer sit out there, portraying the country as somehow taken over by radical, alien forces - which they can simply oppose with ever ascending levels of hysteria and rhetoric. And the more practical and detailed and concrete the compromises, the less oxygen blowhards like Palin and Limbaugh will have to breathe.

Now for the short-term benefits of resolving this tax-and-spend dilemma so swiftly. The president urgently needs to get the new START and DADT through the Senate. DADT would be a major boost for his base - and the country's military. Getting START through is critical to his foreign policy cred. If he can pull all this off by Christmas - and the Senate should indeed stay open for an extra week - the last Congress will indeed be viewed by historians as one of the most substantive (and liberal) in recent history. And Obama will have orchestrated it - while ending up firmly planted and rebranded in the center.