Axelrod signals surrender on tax policy

AXELROD SIGNALS SURRENDER ON TAX POLICY…. [Updated below]

By now, everyone is no doubt familiar with the game of political chicken on tax rates. The question has been which side would blink first.

President Obama, with large Democratic majorities in both chambers, has said he would accept a permanent reduction in middle-class rates and a temporary extension of breaks for the wealthy. Republicans have ruled out all compromises, have said they will only accept everything they want, and have promised to kill middle-class tax cuts unless Dems agree to protect the rich.

The obvious call, at least to me, is for Dems to bring the White House’s compromise to the floor and dare Republicans to kill the tax cuts. Yesterday, however, David Axelrod told Sam Stein and Howard Fineman that the White House is prepared to simply give in to GOP demands.

President Barack Obama’s top adviser suggested to The Huffington Post late Wednesday that the administration is ready to accept an across-the-board continuation of steep Bush-era tax cuts, including those for the wealthiest taxpayers.

That appears to be the only way, said David Axelrod, that middle-class taxpayers can keep their tax cuts, given the legislative and political realities facing Obama in the aftermath of last week’s electoral defeat.

“We have to deal with the world as we find it,” Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. “The world of what it takes to get this done.”

“There are concerns,” he added, that Congress will continue to kick the can down the road in the future by passing temporary extensions for the wealthy time and time again. “But I don’t want to trade away security for the middle class in order to make that point.”

And that, in a nutshell, is how one loses at the negotiating table. Republicans have said they were prepared to kill the entire tax-cut package to get what they want, and Democrats have said they’re not. Axelrod doesn’t want to “trade away” what the administration wants, and Republicans were prepared to “trade away” everything to ensure their success.

The GOP pretended to negotiate from a position of strength and that, it appears, was enough.

“We have to deal with the world as we find it”? Well, this world features a Democratic president with a fair and popular tax-cut package, working with a Democratic House and a Democratic Senate, going up against a Republican minority that says it has no qualms about raising everyone’s taxes.

Dems could have brought the package to the floor and dared the GOP to vote against tax cuts. I was actually looking forward to the headline: “Republicans kill tax cut compromise; higher rates kick in Jan. 1.” Apparently, that’s not to be.

I don’t want to jump to too many conclusions here. Axelrod’s position doesn’t always win, and he may yet be overruled. For that matter, in this debate, positions have a way of shifting — not too long ago, John Boehner said he’d settle for the Democratic tax plan if that’s the best he could get, though he quickly changed his mind.

But as of yesterday, Axelrod’s comments are what we have to go on.

I hope Axelrod also appreciates the precedent this sets: Republicans are told that if they just hold their breath long enough on key issues, the White House is willing to cave. When it comes to the debt limit and various Republican attempts to shut down the government, this isn’t exactly the signal the president’s team should be sending.

Update: Axelrod emailed Greg Sargent this morning, insisting, “There is not one bit of news here,” and that the White House position has not changed.

White House Communications Director Dan Pfeiffer added, “The story is overwritten. Nothing has changed from what the President said last week. We believe we need to extend the middle class tax cuts, we cannot afford to borrow 700 billion to pay for extending the tax cuts for the wealthiest Americans, and we are open to compromise and are looking forward to talking to the Congressional leadership next week to discuss how to move forward. Full Stop, period, end of sentence.”