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Wednesday, December 8, 2010

Why Team Obama Weren't Ready from Day One


Ezra Klein explains how the GOP had the correct assessment, while blowing smoke about "uncertainty" at everyone (perhaps especially Tim Geithner, who I judge to be susceptible to these things, ever since his bizarrely conciliatory comments at his confirmation hearings).

By far the thing they were most concerned about was the estate tax. (Once you realize this, you understand that the President had significant leverage over both the GOP and his own party, even going into the next session).

Without having any sources or knowing anything about the behind the scenes, I would have agreed with this assessment, a priori:

Let's start with the Republicans. For one thing, the things they wanted were things they really, really wanted. A number of sources with direct knowledge of the negotiations have fingered the estate tax as the major player in the size of the deal. "Republicans were extremely eager to get benefits for the top tenth of a percent of Americans," says one senior administration official.

It was the estate tax, in this telling, that secured Republican support for, among other things, the two-year extension of the refundable tax credits and the payroll tax cut. Republicans believe that the two-year extension of the estate tax at Lincoln-Kyl levels will turn into a permanent extension of the estate tax at Lincoln-Kyl levels. So they attached much more importance to it than the price tag might suggest.

And it went beyond the estate tax: Conservatives saw the extension of the tax cuts as an important pivot point in American politics -- full stop.

So, they had the leverage they needed, with the estate tax and the alternative minimum tax.