Why Democrats Surrendered on Taxes

The tax fight was lost before it began, so President Barack Obama decided to play for a tie.


Nowadays it’s popular to apply the “bad poker player” analogy to President Barack Obama and Democrats when it comes to their failure to match wits with Republicans on expiring tax cuts. The New York Times’ David Leonhardt has a “Kenny Rogers Theory“: Democrats can’t figure out when it’s time to hold ’em or fold ’em. But that’s not quite it, because they fold all the time.

Progressives urged Obama to call the GOP’s bluff. But it didn’t look as if Republicans were bluffing on what they’d do to extend tax cuts. Democrats’ problem, as any good poker player will tell you, is that they haven’t figured out that in order to win, you have to force the other guy to make a decision about his chips before he forces you.

Instead they made a deal Monday night that gave the GOP what it wanted: extending the life of Bush-era 35 percent top marginal tax rates for all brackets for two more years. It’s not only a retreat from Obama’s pledge to cut taxes only for those households making under $250,000; it also means that rates will be set to expire again, just in time for Republicans to dust off the issue and drag it back out for the 2012 presidential election.

Democrats had a chance to have a showdown over taxes before the election, when Republicans had something to lose — but they didn’t. They could have voted on unemployment benefits before taking up the tax issue, making Republicans vote against an extension right at Christmastime. But to do that, they would have had to be willing to lose — and they weren’t — even if half the unemployed people they think they represent probably voted Republican in November. So Republicans got the lower tax rates and a chance to flog the issue again two years from now.

Obama didn’t get what he wanted, but he got what he had to have politically: a mercifully short debate and a chance to come out looking reasonable in comparison with both parties in Congress. Congressional Democrats didn’t get anything they wanted, and if they’re indeed playing poker, right about now they look like the guy who has to cut his Vegas trip short because he’s all out of cash and got sick eating too much $4.99 prime rib.

But if they’re confused about what went wrong, they shouldn’t be. The tax debate was lost a long time ago, and Democrats have only themselves to blame. It feels like ancient political history now, but it was the president’s ill-fated dialogue with “Joe the Plumber” that got Obama off on the wrong foot on taxes. He turned his own reasonable, nuanced explanation of his tax proposals into a punch line when he said he wanted to “spread the wealth” — and he’s never been able to shake it.