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Eric London Headshot

Method in the Madness

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The tax cut compromise is less about ideological betrayal or spinelessness and more about generating economic and political recovery.

We may have dodged another Great Depression, but the unemployment rate hangs stubbornly near 10 percent six months after the "recovery" began. And among the less educated, unemployment is at 15 percent or even more. Simply waiting for things to naturally get better is not an option for the millions of Americans still feeling the intense pain of joblessness, bankruptcy, and foreclosure.

From day one, Obama and his team -- led by Larry Summers and Tim Geithner -- understood this. In early 2009, they passed a stimulus package bigger than most thought possible.

By early summer, it was clear that the first round of stimulus was insufficient to jump-start job creation, despite the public optimism emanating from the economic team at the White House. Due to the conservative counter reaction to round one, it was impossible politically to raise the issue before the election. If Democrats won the House, undoubtedly we would be looking at a second stimulus package in a lame-duck session. But the pasting delivered by the right sealed the deal and made another any additional stimulus based on spending an impossible dream.

But team Obama wasn't going to give up that easily -- because there are two ways to skin a stimulus cat: through tax cuts as well as through spending.

Smartly, Obama realized the best opportunity to get the largest tax package with Republicans was now -- while everyone wanted to take a pause from contact sports and show they could govern. Boehner and McConnell feel that way now, but they might not in February or July. So Obama boldly struck quickly and cut a deal that will inject one trillion dollars into the economy over the next two years -- compared to allowing an expiration of the Bush tax cuts.

Yes, he could have cut a better deal. Isn't that the definition of dealmaking? It always can be made better, including this one. The pure of heart progressive caucus would rather fight and be right, in June or July, than move forward on a deal right now. But that path would have delayed any eventual tax cut stimulus to a point in the future when it would be too late to have produced fast results.

Whatever you think of throwing in the towel even before Speaker Pelosi becomes Speaker Boehner, the injection of stimulus via tax cuts will happen in record time. Speed is the name of the game if the economy and employment is to create jobs in significant numbers in the next two years.

High unemployment is also a political death sentence -- ask Jimmy Carter and George H.W. Bush -- and read Gerald Ford's 1976 epitaph: Here lies a one-term president who ended his term with 7.7 percent unemployment. Only Reagan escaped their fate with a high jobless rate continuously plummeting in the lead up to the reelect. The current administration knows this history well and is determined not to repeat it.

The left shouldn't feel betrayed. Obama is a calculating political animal who knows that without a second term, liberal priorities will be shelved for another four or eight years; he can't afford to mire himself in ideological purity..

He's right: Reelection is key to the broader agenda. And that rests on jump-starting the economy to start producing jobs before the end of next year. The White House has made the clear-eyed calculation that the unemployed don't care a hill of beans about philosophical fights inside the Beltway. They care about results.

Hopefully, this dose of good policy will result in more jobs and less economic pain across the board. And just maybe, Obama in the White House until 2017.