Tax Deal Offers GOP 'Hostages' for 2012

Krugman: Democrats will need to make more deals in election year
By Matt Cantor,  Newser User
Posted Dec 10, 2010 12:10 PM CST
President Obama speaks before he signs the Claims Resolution Act of 2010 which settles long-standing lawsuits by African American farmers and Native Americans against the US government, Dec. 8, 2010.   (AP Photo/J. Scott Applewhite)

(Newser) – President Obama may have rescued some tax “hostages” from the GOP—the unemployed, for example—but in the process, he set up another hostage situation down the road, writes Paul Krugman in the New York Times. The "not-so-bad stuff” in the tax deal “expires at the end of 2011,” setting up slower growth in 2012. That means that in an election year, there’ll be “pressure on Democrats to offer Republicans something, anything, to improve economic prospects.”

One big example: "Republicans may try using the prospect of a rise in the payroll tax to undermine Social Security finances.” Meanwhile, Obama is railing against the left for being unable to accept a “compromise in the national interest,” Krugman notes. “By seeming angrier at worried supporters than he is at the hostage-takers, Obama is already signaling weakness, giving Republicans every reason to believe that they can extract another ransom."

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