The tax deal Biden touted as a win was a giant betrayal of Democratic values
Colorado Sen. Michael Bennet practically came unglued Thursday as he watched former Vice President Joe Biden tout his bipartisan dealmaking skills by showcasing what was arguably among the worst of Obama-era deals. Reflecting on a deal he cut in late 2012 with then-Minority Leader Mitch McConnell, Biden offered, "I got Mitch McConnell to raise taxes $600 billion by raising the top rate."
Bennet, bursting at the seams, was allowed a 30-second response and his recollections of Biden's supposedly cagey negotiations were quite different. "The deal that he talked about with Mitch McConnell was a complete victory for the Tea Party," Bennet charged, noting that it extended the Bush tax cuts permanently. "The Democratic Party had been running against that for 10 years. We’ve lost that economic argument because that deal extended almost all those Bush tax cuts permanently and put in place the mindless cuts that we still are dealing with today that are called the sequester. That was a great deal for Mitch McConnell. [...] It was a terrible deal for America."
Bennet's reflection is much more grounded in the reality of what happened. The Obama White House first capitulated on extending the Bush tax cuts in late 2010, cutting a deal to extend them by another two years. I personally recall Obama's '08 deputy campaign manager, Steve Hildebrand, decrying the deal on cable television, saying it was a complete betrayal of the values Obama had run on.
“I think the president made a huge mistake in supporting any extension of tax cuts," Hildebrand told Huffington Post at the time. “We can’t afford it as a country, and we should recognize that. ... And the whole idea of negotiating with Republicans who won’t negotiate in good faith, it is not the direction the president should be taking.”
But that capitulation set up Biden's ultimate giveaway to the GOP toward the end of 2012. I'm going to skip over some of the details of those negotiations. But the thing to know is that then-Senate Majority Leader Harry Reid felt like he was in a good position vis-a-vis McConnell. Reid had resolved to let all the tax cuts expire on everyone (the so-called “fiscal cliff”) and then negotiate with Republicans to restore some of those tax cuts to working-class and middle-class Americans while letting tax rates rise for the richest Americans. The Intercept’s Ryan Grim has more details here. But the bottom line is, McConnell went behind Reid's back to negotiate directly with Biden because he knew he could get a better deal. And he did.
In desperation, McConnell reached out directly to Biden, calling him on the phone and explaining that Reid was refusing to be reasonable.
The deal Biden cut was to make all of the tax cuts permanent in exchange for a two-month extension on sequestration, which was going to force across-the-board spending cuts to the entire federal budget. The White House wrongly believed that cuts to the GOP's prized agencies, like the Defense Department, would bring Republicans to the negotiating table to avert the across-the-board cuts. The White House was wrong. The spending cuts went into effect March 1, 2013.
As Roll Call wrote at the time, “By making all of the tax cuts permanent but only avoiding the sequester for two months, the president traded away most of his leverage in return for only half of the revenue he had been seeking—and no clear way to force Republicans to the table for more.”
In other words, the deal sucked. It was a gross tactical miscalculation that left Republicans with a much better bargaining hand.
The Intercept's Grim recently interviewed Harry Reid about the episode for his new book, We’ve Got People: From Jesse Jackson to AOC, the End of Big Money and the Rise of a Movement. (Full disclosure: I co-authored the LGBTQ chapter of this book.) Grim writes:
Years later, Reid still regrets how it went down. “If we’d have gone over the cliff, we’d have had resources to do a lot of good things in the country — infrastructure development — but it didn’t work out that way,” Reid said. Letting all the tax rates go back to pre-Bush levels would have yielded the Treasury around $3 trillion over 10 years. Instead, the deal ultimately brought in around $600 billion (or would have, if taxes hadn’t been slashed again by Republicans in 2018).
Biden’s deal ultimately hamstrung Democratic priorities and set us on the path to the ballooning deficit and debt we are experiencing today. Granted, Republicans shifted both problems into high gear with their tax giveaway to the giant corporations and the mega wealthy.
But make no mistake, Sen. Bennet was right: "That was a great deal for Mitch McConnell. [...] It was a terrible deal for America." And Biden is now selling his bipartisan deal-making skills as a central justification for his candidacy.
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