Obama’s Tax Triumph

With Congress approving his tax plan, Obama obtained an important political victory. Doubtless it does not have the shine of other legislative triumphs, like health care reform, but it could be much more politically beneficial.

Patrick Leahy, one of the most progressive senators, has recently warned Obama that, with deals like this one, which extended the Bush tax cuts for two years, he may be risking his re-election. His reasoning is that creating distance from his Democratic base could be fatal in 2012. However, the truth is really the opposite.

For Obama, with respect to 2012, the most dangerous symptom of the midterm elections was the massive flight of independents from the Democratic Party. To get them back, Obama will obviously have to turn right, be flexible and make deals with the Republicans. And this is exactly what he has done on the highly symbolic issue of the Bush tax cuts.

The left wing of his party was calling for him to wage a frontal assault on the Republicans over this issue. The Democrats believed that they had an advantage over their adversaries. And they probably did. Nonetheless, the White House was not interested in waging a partisan war, even a winnable one. Instead they wanted to demonstrate that the president had heard the message of the last election.

To move Obama to the center, nothing could have been more effective than the “shellacking” of the Democratic left that we saw last month. This is a situation which will certainly present itself again in mid-2011, when the White House will present a timetable for gradual withdrawal from Afghanistan. For the moment, the polls show that Obama still has solid progressive support in America, which means he has room to swing to the right.

The tax deal is not only good for Obama because it allows him to appear centrist, but also because it provides a short-term economic stimulus, which, in theory, should improve the labor market. And that issue — the unemployment rate — is probably the most significant factor in deciding if the president will be re-elected.

That said, it is also true that Obama cannot completely neglect his base. Political success always consists of being able to appeal to one’s base as well as to the center. It will be interesting to see how successful the White House is in finding a balance between getting along well with the Republicans on some issues while simultaneously giving the required winks to his base on others, such as overturning the “don’t ask, don’t tell” policy.