RATIONALE FOR REPUBLICAN OUTREACH…. We talked earlier about Barack Obama engaging congressional Republican leaders on how to shape an economic rescue package. Does Obama knows what he’s doing, reaching out in good faith to opponents who don’t believe in working in good faith? Noam Scheiber argues that the president-elect may very well have a plan.
By agreeing to channel up to 40 percent of the stimulus through tax cuts, Obama is essentially calling the GOP’s bluff. He’s saying, “You guys are making a principled argument that tax cuts can be a more efficient way to stimulate the economy. I’m accepting that argument in large part. So rather than spend a lot of money helping low- and middle-income people, I’m going to get that money to them via tax cuts.”
At which point he’s kind of backed them into a corner. If the GOP accepts, then great. If they turn around and say, “Well, when we said tax cuts, we actually meant tax cuts for wealthy people, not for low- and middle-income people,” then it becomes blindingly obvious that they weren’t making a principled argument at all. They were trying to shake Obama down on behalf of their rich cronies.
And, indeed, it looks like the GOP, while momentarily torn, can’t resist the taking the bait. According to today’s Post, Arizona Sen. Jon Kyl is responding by pushing for permanent cuts in corporate and capital gains taxes — neither of which is likely to have much short-term stimulative effect.
That sounds relatively compelling, but I’m still skeptical. Obama meets Republicans half-way, offering $300 billion in tax cuts, in part to generate GOP support, and in part because there’s only so many “shovel-ready” infrastructure projects he can invest in for short-term stimulus. Republicans respond, Scheiber says, by making ridiculous demands, which make them appear foolish and disinterested in economic growth.
On the other hand, Republicans don’t care about appearing foolish; they care about tax cuts, whether they make sense or not. Likewise, GOP opposition to stimulus spending will also make the party appear stark raving mad, but again, that’s never been a primary concern for the modern Republican Party.
Scheiber might be right, and maybe Obama has already helped back Republicans into a corner, but what does Obama get in return? Maybe a slightly bigger congressional majority in support of his economic rescue package, but given Obama’s popularity, the state of the economy, and the merit of a stimulus bill, a few Republicans were probably going to vote for this package anyway.
Put it this way: what will the GOP congressional leadership do after they’ve been backed into a corner?
