After weeks of negotiations, President Obama and Senate Republicans have reached an agreement on how to extend those Bush tax cuts everyone has been talking about. As Republicans insisted upon, they'll be extended for two years for both your first $250,000 and all the money you make after that. Obama had campaigned for president on making sure the cuts for income over $250,000 expired, so he certainly didn't follow through on that one. Obama also agreed to exempt estates of up to $5 million from the estate tax (more morbidly, the death tax) and set a rate of 35 percent for those over $5 million.
Many Democrats in the Senate and House are not going to be pleased about these things. According to the Times, "Some senior Democrats said an agreement by Mr. Obama to accede to Republican demands on the estate tax could lead to a revolt among lawmakers." Self-avowed socialist Democrat Bernie Sanders is contemplating an attempt to filibuster the tax deal. Democratic senator Sherrod Brown of Ohio says he is "not at all happy with this." A group of House progressives are circulating a letter urging Nancy Pelosi to resist the deal. A Times editorial says Obama capitulated and "should have fought harder." Don't even get us started on the liberal blogosphere.
But Obama secured concessions from the GOP as well. Federal unemployment insurance, which recently expired, will be extended for thirteen months. The Social Security payroll tax for the nation's working people will be lowered by 2 percent for a year, saving a family making $50,000 about $1,000. Such measures not only help lower- and middle-class people but also act as a form of economic stimulus. (If you're wondering how the $900 billion tax deal is paid for, it's not. It seems that, despite all the talk about the need to lower the deficit recently, they're just going to look the other way on this one.)
In announcing the deal, Obama explained his rationale for agreeing to terms that were less than ideal. "The American people didn't send us here to wage symbolic battles or win symbolic victories," he said. Obama didn't get exactly what he or his liberal base wanted. But this is who he is. He is a compromiser to his core, even on his most explicit campaign promises. Reaching agreements with the other side is what he said he'd do, and since the GOP aren't the most pliable bunch these days, his compromises are going to be more on their terms, especially after they take the House and a few seats in the Senate. Besides appealing to his instinct for pragmatism, his move to the right on certain issues will make him more popular with independents and conservative Democrats. So this is probably what you should expect for the next couple of years.