Count me as surprised and wrong on the shape of the Obama-McConnell tax deal.
Given the certainty that any tax-rate extensions would be temporary, I thought they'd be either for three years or one year. I thought the Obama campaign would prefer to run without having to re-fight the same tax-rate battle. Totally wrong. Barack Obama wants this fight.
A school of thought on the tax deal argues that its elements, particularly the 100% expensing deduction for next year, will shift enough economic activity into 2011 to create an uptick in growth large enough to pull some guilt-ridden independent voters back into Mr. Obama's column.
Could happen. You might even mark Mr. Obama as the 2012 favorite—if, like Bill Clinton in 1994, he stiffs his party's left and embraces the new political center whose blueprint was just drawn for him by his own Bowles-Simpson deficit commission.
For Obama and the Democrats, the new economic royalists are anyone with a taxable income over $200,000.
Embracing the broad outline of the commission's proposal lets him defend the core ideas of ObamaCare while leading the restoration of a growing, competitive America. To ensure the high economic growth needed to support his new health-care entitlement, Mr. Obama would propose a historic, permanent tax reform built around a private sector taxed more lightly at the corporate and personal level. Many independents who deserted him the past year and threw Democrats off the cliff in November would cheer if he gave that speech.
It won't happen. This president can't do it.
Ghosts of the Democratic past—Hubert Humphrey, Al Smith—have been known as Happy Warriors. Barack Obama is a Class Warrior with every fiber of his being. And he isn't happy.
That Monday tax deal had to be the worst day of Barack Obama's presidency. I'd be surprised if this most insouciant of presidents was able to sleep Monday after the statement he issued at the White House about the deal. That was no mere statement. It was a class warrior's cry from the heart.
He lashed "the wealthiest Americans" three times, not to mention "the wealthiest 2% of Americans," "tax cuts to millionaires and billionaires," "wealthy people" and—channeling the French revolution—"the wealthiest estates." (Louisiana Democratic Sen. Mary Landrieu, answering the party's casting call for the role of Madame Defarge, denounced the deal as "morally corrupt." Keep her away from knitting needles.)
I don't buy that all this was said as a sop to the angry left. One month into his presidency, the Obama budget message repeatedly ripped into "those at the commanding heights of our economy." When at the White House Monday Mr. Obama suggested his next campaign will be "a conversation with the American people" about ending those rates (35%!) for "wealthy people," I take him at his word. He won't be at peace until this violation is erased.
Franklin Roosevelt in his speech to the 1936 Democratic Convention attacked what he called "economic royalists." Nearly 75 years later, Barack Obama, everyone around him in the White House and the kind of Democrats who migrate to Washington seem stuck in some sort of Ma Joad idea of the American economy.
But they've gone FDR and John Steinbeck one better. In the world of the Grapes of Wrath Democrats now gagging over Barack Obama's "sell-out" to the rich, the new economic royalists aren't limited to "the Ishmael or Insull." Now it's any single person or married couple in America with a pre-tax income at $200,000 or $250,000.
Will the nation's new economic royalists step forward, rope in hand, to produce enough economic activity to help Mr. Obama to a second term of retribution? Maybe not. According to the National Association of Manufacturers, some 70% of manufacturing concerns in the U.S. have owners whose business is taxed at the individual rate (S corporations and the like). These are the people expected to commit capital to new hires and equipment.
20TH CENTURY FOX / THE KOBAL COLLECTION
The party is stuck in a Ma Joad vision of the American economy.
But if an angry, let-me-be-clear Barack Obama just looked into the cameras and said he's coming to get you in two years, what rational economic choice would you make? Spend the profit or gains 2011 might produce on new workers, or bury any new income in the backyard until the 2012 presidential clouds clear?
No matter how much economic bump Mr. Obama gets in 2011 from extending the Bush-era tax rates, the 2012 election will be fought over a deep national anxiety that he rightly identifies but misinterprets.
The 1936 Democrats argue that America can't be strong again until what they identify as "2% of taxpayers" are dragged from their homes and punished. It's a stirring tale that is irrelevant to the immediate needs of a United States that has to compete in a global economy of intense and volatile competition.
In such a high-stakes world, Barack Obama's obsession with having it out over the tax tables is a vulnerability. His opponent in 2012 should run straight at it.
Write to henninger@wsj.com
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