Obama Fails His First Test Already

Obama has now faced his first test since the election. He failed spectacularly. Not only did he show that he learned nothing from the election and that he would continue to put rigid ideology ahead of results, but he roused the suspicions of his base in the process. Indeed, George Soros is talking about progressives needing to “go around” Obama. That’s a lot of failure to achieve in one week.

The issue in question is whether or not to make the Bush tax cuts permanent. Last week, Obama puppeteer David Axelrod suggested to the Huffington Post that Obama would agree to a temporary extension of the Bush tax cuts for “the rich” in exchange for making the cuts permanent for families with incomes below $250,000 a year.

This set off a firestorm of progressive anger. Not only do progressives not want any tax cuts for the filthy rich, but they can barely stomach the idea of tax cuts for anyone. When they heard that Obama was going to sell them out, they were not amused.

Congressional Democrats were angry too. They thought Axelrod’s statement undermined their bargaining position with the Republicans before the talks even began. After all, if Obama announces that he is willing to meet the Republicans half way, then surely the Republicans now would demand more?

Obama responded, a couple days later, by holding a telephone conference with his left flank, in which he told them that he is “open to ideas, but fundamentally the middle-class tax cuts have to be made permanent.” Then he repeated his “opposition to making the high income tax cuts permanent.” That seemed pretty clear. Only it wasn’t.

The following day, a White House spokeswoman issued a statement saying: “His position has been clear for weeks and he reiterated his interest in a compromise to ensure middle class families have the certainty their taxes will not go up.” In other words, forget all that stuff Obama assured the Democrats about, he will happily trade a tax cut for the rich for an extension of the middle class portion of the tax cut. This is the Axelrod position which upset the Democrats so much.

Thus, Obama angered Congressional Democrats by undercutting them, and he angered his base by calling into question what he really believes by issuing ambiguous contradictory statements. Could he really be willing to cut taxes on the stinking rich (forget for the moment that these aren’t tax cuts, they are instead a halt on tax increases). Grrrrrr. What’s next, a bank bailout?

At the same time, Obama’s vocal opposition to “tax cuts for the rich” showed the public that he didn’t listen to the election. Love the rich or loathe them, it is beyond dispute (unless you’re a liar like Paul Krugman) that raising taxes on the rich will depress the economy, something which would be very stupid to do at a time when the economy is teetering on the edge of a possible double-dip recession. Thus, by seeming to take a hard line against these tax cuts, Obama signaled the public that he intends to put his ideology ahead of intelligent economics. And if the election truly was about the economy as the Democrats claim, then this signal was aimed straight at the very heart of what has upset the public.

Ironically, for once, Obama actually has his finger on good politics. If he agrees to the whole tax cut package right now, then he may stave off a double dip recession and he can avoid an obvious spot of potential blame, i.e. “he caused this by letting the Bush tax cuts expire.” And if he can get a temporary extension for the rich but a permanent extension for the middle class, then Obama has actually managed to lay a bit of a trap for Republicans, who will need to come back in the future to seek an extension for the rich only. But his base won’t accept this because his dithering and ambiguity have made them suspicious about his true beliefs.

Thus, he’s turned what could be a win for him into a stunning defeat with all sides now angry at him. Not smart.