Coming out of the midterm elections, the Obama administration faces two questions on which the choice is fight or cooperate -- the deficit commission and the Bush tax cuts. On both issues, most liberals want the administration to fight, while the conventional wisdom advocates some kind of compromise. To get a sense of how temporary extension of all the Bush tax cuts is now received in official Washington as a sensible compromise, consider the language in this recent Washington Post story:
In the days after the election, that cold reality appeared to have overtaken the harsh rhetoric of the campaign trail. A consensus was quietly emerging on taxes, with key lawmakers and senior aides saying both parties were preparing to accept a temporary extension of all the cuts to defuse a brutal, drawn-out fight.
Brutal fights and harsh rhetoric are bad. "Reality" is good.
Anyway, the liberal position is relatively coherent: Obama should fight to stop the Bush tax cuts as well as the debt commission's plan, which is quite tilted toward Republican priorities. I'm in favor of fighting on the tax cuts and exploring a potential deal on the deficit.
The one position that's totally incoherent is the belief that Obama should cooperate on both. First, the policy aims are radically in tension: extending the Bush tax cuts, which pushes the ball down the field and gives Republicans another chance to keep them alive by invoking the dread specter of a middle-class tax hike, increases the chances that they'll be made permanent and thus threatens to increase the deficit.
On top of that, it weakens the Republicans' incentive to make a deal on the deficit. After all, how they judge the tax provisions in the debt commission's proposal ultimately depends on what they have to compare it to. The Republicans' primary goal is to reduce the tax burden on the rich. Compared to a tax code where the Bush tax cuts have expired, the commission's tax proposal might not look too bad. Compared to a tax code where the Bush tax cuts remain fully in effect, it might look bad indeed. Capitulating on taxes makes the slim chances of a deficit deal virtually nil.
Believing the administration should compromise on both issues makes sense only if you're attracted to the aesthetics of bipartisanship with no interest in the substance of the policy. Sadly, this described a fair chunk of the Washington establishment.