How the White House cut its deal and lost its base #p2

from http://voices.washingtonpost.com/ezra-klein/2010/12/how_the_white_house_cut_the_de.html

If you look at the numbers alone, the tax cut deal looks to have robbed Republicans blind. The GOP got around $95 billion in tax cuts for wealthy Americans and $30 billion in estate tax cuts. Democrats got $120 billion in payroll-tax cuts, $40 billion in refundable tax credits (Earned Income Tax Credit, Child Tax Credit and education tax credits), $56 billion in unemployment insurance, and, depending on how you count it, about $180 billion (two-year cost) or $30 billion (10-year cost) in new tax incentives for businesses to invest.

But that's not how it's being understood. Republicans are treating it as a victory, and liberals as a defeat. Which raises two separate questions: Why did Republicans give Obama so much? And why aren't Democrats happier about it?

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. As my colleague Jennifer Rubin puts it, Republicans "won the philosophical point (tax hikes impede economic growth) and, candidly, are more than delighted to have a repeat of this debate for the presidential campaign in 2012." The Obama administration didn't see the tax cuts as a philosophical point, and is similarly convinced that a repeat of this debate in 2012 -- when the economy is better and the deficit is worse -- will favor their side. So rightly or wrongly, they judged the two-year extension as much less of a loss than the Republicans judged it a win -- and that gave the Democrats leverage on the rest of the package.

rest at http://voices.washingtonpost.com/ezra-klein/2010/12/how_the_white_house_cut_the_de.html