Obama surrendering on tax rates?

The message from Barack Obama’s post-midterm press conference on tax rates wasn’t just spitballing.  P0litico reports that the White House has followed it up with consistent messaging that the White House will back a temporary extension of the current rates, including an extension of the top rate which they had opposed before the election, noting the new political realities in the post-Tea-nami environment.  David Axelrod reiterated the new position to Huffington Post:

President Barack Obama’s top adviser suggested to The Huffington Post late Wednesday that the administration is ready to accept an across-the-board, temporary 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.”

Politico’s Carrie Budoff Brown gets reaction from the Democratic base, and it’s not exactly a rousing endorsement of compromise:

But the move is already being interpreted by the progressive base as a cave-in. They see little reason to cede ground to Republicans because polls show voters don’t favor renewing tax cuts for the wealthy. They say they want Obama to hold firm to his longtime campaign pledge to let those high-end tax breaks expire.

“Obama caving on the high income tax-cut issue guarantees that he will attract an intra-party opponent from the progressive wing of the Democratic Party,” Boston University law professor Cornelius Hurley wrote on POLITICO’s Arena. “The White House misreads the mood of the country. Tea partiers do not reflect that mood. Independents and Democrats disenchanted with Obama’s lack of conviction do.”

Jane Hamsher, a frequent White House critic, posted reaction last night to Axelrod’s comments under the headline, “Obama Twists Own Arm, Says ‘Uncle’ to Extending Bush Tax Cuts.”

At this point, Obama would welcome a primary challenge from the Left.  The midterm elections showed that the electorate had no taste for the radical agenda pushed by Nancy Pelosi of high-spending big-government programs, and even less patience for economic stagnation.  A primary challenge from the Left would allow Obama to at least start his campaign by leaning back to the center and attempting to paint the challenge as proof that he governed as a moderate.

That’s certainly why Obama is crying “Uncle,” at least to a certain point.  The GOP wants all of the current tax rates made permanent, and the leak from the Debt Commission gives them a little more standing for that position.  The trial balloon suggests keeping rates largely as they are but reducing tax credits and deductions to generate more consistent revenue.  Obama wants to kick the can down the road past the next presidential election, figuring that he can deal more easily with a challenge from a Russ Feingold-type challenger on his left in the primaries than a serious center-right Republican nominee in the general election by doing so.

It’s not a surrender, really, just a strategic retreat to regroup.  We’ll see if his own troops will allow him to reposition himself or abandon him for doing so.

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