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Midterm Correction: A Mulligan for Hope and Change?

12:00 AM, Nov 4, 2010 • By GARY ANDRES
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Tuesday’s election produced another opportunity for hope and change in Washington.

Midterm Correction: A Mulligan for Hope and Change?

Or at least that’s one way of looking at it.

Instead of wallowing in his party’s defeat, President Obama could interpret the outcome as a voter-imposed, political do-over – another swing at rising above the polarized politics of the past.

Will he use his political mulligan? It’s unclear. The president sounded somewhat conciliatory in his press conference this week, but we won’t know for sure until he and congressional leaders talk specifics.

Let me offer a couple specifics for that first sit down with legislative leaders.

Obama could call for swift congressional action on two items – by providing at least two more years of tax certainty to all Americans and by urging lawmakers to enact a short-term spending plan to serve as a bridge until the new GOP majority takes charge next year.

Both issues require a heavy dose of seasoned statesmanship, a refreshing combination in our beleaguered political culture. And there are a lot of reasons why the president should take these steps.

Government programs run out of money on December 3 and the largest tax increase in American history is slated for January 1. Both parties know there is little margin for error on either front given the shaky economic conditions. A whopping 87 percent said they were “worried about the direction of the economy next year,” according to Tuesday’s exit polls. Why not do the right thing and show a little bipartisan cooperation in the process?

Unfortunately, decision-making in the post election chaos is always tricky.  But this is where Obama could show some leadership, growth, and maturity.

Lame duck congressional sessions almost always over promise and under deliver. They normally feature more going away parties for departing lawmakers than serious legislative business. This year is not likely to disappoint aficionados of conventional wisdom.

But the December expiration of the current federal government funding measure – the so-called Continuing Resolution or CR – and the expiration of the Bush tax cuts at the end of the year create a unique dynamic for action, despite an environment loaded with political bereavement for the current Democratic majority.

On taxes, President Obama and the Democratic leadership confront a series of decisions. While most of the debate has focused on individual tax levels, capital gains and dividend rates, the child credit and the death tax all snap back to pre-2001 and 2003 levels on January 1.  A host of business incentives – like the R&D tax credit – also expire at the end of this year.

The White House wants to extend current tax rates for individuals making $200,000 or less and families earning under $250,000. Republicans say that approach also raises taxes on a lot of small business income (as much as half of all small business income could be subject to these higher levies), further harpooning a bleeding economy.

Extending the tax cuts for everyone probably has the majority of votes in both the House and the Senate. 

Here is where the president could show signs of class, growth, and grace.  Why not announce he supports a two-year extension of all tax cuts and urge Congress to pass such a law before Christmas? That would represent a real act of hope and change.

Spending faces similar hurdles. Prior to the election House and Senate Democratic staffers worked busily on an omnibus spending bill to fund programs through next September. This would replace the current stopgap CR that expires on December 3.  These plans, however, included no Republican input and will be rejected by the current GOP leadership and rank-in-file.

“If they insist on an omnibus bill,” one House GOP leadership staffer told me, “it just gives us an excuse to pass a bunch of rescission bills next year and sets up a bunch of fights over spending.”

Here, too, Obama might break the logjam. Why not announce that he looks forward to working with the new Republican majority on a spending plan next year and Congress should extend the current CR until next March.

But there’s another reason beyond economic certainty that Obama and the Democrats should yield on taxes and spending.

Both parties on Capitol Hill need time to let the smoke clear over last Tuesday’s electoral battlefield.  Republicans and Democrats must choose new leaders, set their agendas, pick committee chairs, and orient the largest class of freshly elected lawmakers in more than a half-century.

The president must recalibrate his political and governing tactics. No doubt there will be plenty of fights ahead with Republicans over the next two years.  Taking two major fiscal policy flashpoints off the table for now would give him chance to reset the political GPS system.

For Obama Tuesday provides a chance to do a mid-term correction -- an opportunity to show he can do more than just talk about hope and change, but also apply it to his governing strategy.

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