Today's Power Play: Liberals Fume as Obama Gives In on Taxes

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Obama Gives In on Taxes; Liberal Fury at Deal; Dems Act Fast to Protect Obamacare from GOP; Wikileaks Go On After Assange Arrest; Appropriations Pick Shows Boehner's Tea Party Bona Fides

"I am not willing to let working families across this country become collateral damage for political warfare here in Washington. The American people didn't send us here to wage symbolic battles or win symbolic victories."

-- President Obama announcing a deal with Republican leaders on extending current tax rates.

Facing a unified Republican opposition, a worsening job market and dimming prospects for his own reelection, President Obama surrendered his years-long push for a tax increase on top earners.

In a deal hammered out with Senate Republicans, Obama hopes to use a two-year extension of current tax rates as a means to achieve some concessions, most notably an extension of benefits to the long-term unemployed valued at close to $60 billion.

It is the first consequence of the sweeping Republican gains in the midterm elections and a sharp reversal for the president's liberal political base, which had urged him to allow an across-the-board tax hike rather than capitulate to Republican demands.

But if liberals had their way and the tax rates did expire, the new Republican-dominated Congress could simply enact its own plans come January. Rather than seeing the year end in a stalemate that causes every American's tax rates to go up and then facing the prospect of signing a Republican-crafted bill, Obama is trying to get something out of the waning days of Democratic domination.

Plus, his move will be a balm to jittery investors and businesses. Expect markets to rise on word of the deal.

Initial estimates put the total two-year price tag of the package at between $700 billion and $900 billion of deficit spending. It's hard to make such estimates because it is impossible to forecast exactly how short-term government revenues would be effected if tax increases are allowed to kick in.

Key components of the Obama-GOP plan include:

-- Keeping 99-week unemployment benefits available for another 13 months.

-- Reducing workers' Social Security tax from 6.2 percent to 4.2 percent for one year as a replacement for the president's expiring "Making Work Pay" tax credit.

-- Allowing some companies to write off 100 percent of some capital investments instead of 50 percent.

-- Continuing Obama's college tuition tax credits.

-- Instituting a 35 percent tax on estates worth more than $5 million instead of 55 percent at $1 million set to kick in Jan. 1.

"He should not back down. Nor should we."

-- House Progressive Caucus leader Rep. Peter Welch (D-VT) in a letter to outgoing Speaker Nancy Pelosi urging her to resist a compromise tax deal between President Obama and Republicans.

Has President Obama had his "read my lips" moment with his liberal base?

After railing against "tax breaks for millionaires and billionaires" for almost four years as a candidate and as president, Obama has embraced a plan to retain that Bush tax rates he deplores for two more years.

Reaction has been swift and almost uniformly negative on the left. New York Rep. Anthony Weiner summed it up pretty well when he asked "Why are we always punting on third down?"

The New York Times editorial page called the move "craven politicking" and "capitulation. Leading liberal columnist Eugene Robinson pointed to a White House "paralyzed by a deficit of courage."

Liberals have grown to distrust Obama after the escalation of the war in Afghanistan, the continued operation of the Guantanamo Bay prison camp, his accommodation of insurance and drug companies on his health-care law, and his handling of homosexual issues.

Congressional liberals will no doubt feel excused for not supporting Obama on this proposal.

In order to deliver on a sweeping tax compromise with Republicans, President Obama now must rely on the Blue Dog Democrats whose departures from Congress resulted from anger over the president's policies.

The deal should get through the Senate. But getting 218 members of the House on board will be a bit trickier, even if Obama can count on most of the 179 current GOP members of the House to go along.

With liberal members in a frothing fury over Obama's tax deal, the 28 retiring or defeated members of the centrist bloc will be key to passing the Obama-GOP tax plan. Along with the 26 Blue Dogs who were reelected, the Clintonite caucus will hold the key to the plan.

That's where concerns over the deficit may prove a problem for the White House. In order to get the deal done, Obama has not paid for any of the plan. It's all short-term deficit funded - including the money to compensate the Social Security trust fund for the president's proposed payroll tax cut.

But the move comes as the president's own fiscal commission has issued a dire warning about the state of the national debt and many are calling for austerity measures. It may sound dissonant for Obama to propose another round of deficit spending on welfare programs and taxes while simultaneously seeking the smallest pay raise for military members since 1962 and opening the door to changing the rules on Social Security.

But assuming that there are enough Republican and moderate Democrat votes to get the plan through the lame duck session, it certainly won't happen quickly.

While the plan will make it more likely that Republicans will cooperate with Obama on issues like Senate ratification of the new Start treaty with Russia and maybe even allowing gay service members to express their sexualities openly, time is not on the president's side.

Liberals will slow down the measure in the House, where they still control the process and the key committees. And they certainly control enough votes to add troublesome amendments to the plan. Ping-ponging the proposal back and forth between the House and Senate and then the eventual conference to hash out the final version will likely take up the rest of the year.

But it is perhaps fitting that the 111th Congress end this way. It's circuits were overloaded from day one by the huge Obama agenda, so it is only appropriate that it stagger over the finish line trying to handle one last Obama initiative.

"Democrats used Medicare to pay for Obamacare. Republicans could reverse that process pretty simply."

-- A veteran health-care lobbyist explaining to Power Play Democrats' eagerness to fend off scheduled cuts to the program for elderly Americans.

With the calendar so short and prospects so bleak for the liberal agenda in the next Congress, Democratic leaders are racing to get as much business done in the next three weeks as possible.

On the table now is an effort to address a year-long "doc fix" that would prevent Clinton-era cuts to Medicare payments to doctors - cuts that have now piled up to 23 percent. The tentative deal is funded by marginal changes to eligibility rules under the president's national health care law.

Democrats are keen to get as long a deal as possible on the doc fix because it would be a vital tool for Republicans to make more significant changes to Obama's health law. Not only could eligibility for subsidized health insurance be tightened more, but Republicans could use the cuts to induce policy changes.

There is already a shortage of doctors who take government insurance, especially in rural areas. Experts expect that shortage to worsen as millions of new patients are brought into the universe of the insured via Medicaid and direct subsidies as the president's health law kicks in over the next four years.

Any interruption to the current Medicare payment structure would accelerate that shortage, giving the law's foes a prime opportunity to exact changes in return for not crashing the entire system of taxpayer-funded insurance.

The one-year deal, reportedly agreed to by Majority Leader Harry Reid, Minority Leader Mitch McConnell, Finance Chairman Max Baucus and Ranking Member Charles Grassley, squeezes $19.2 billion out of the future costs of the Obama health law by abstruse changes to the conditions under which the recipient of an insurance subsidy whose eligibility changes would have to repay the government.

The patch is "paid for" only in the sense of hypothetical changes to a still-unimplemented program.

"He is accused by the Swedish authorities of one count of unlawful coercion, two counts of sexual molestation and one count of rape, all alleged to have been committed in August 2010"

-- Statement from London's Metropolitan Police on the arrest of Wikileaks founder Julian Assange after his surrender.

Wikileaks founder Julian Assange was arraigned today in London on charges that he coerced two Swedish women into having sex with him. Assange's lawyers say that the charges are trumped up and based on restrictive Swedish rape laws that include failure to wear a condom as potential grounds for a sexual assault charge.

As Assange deals with his own carnal consequences, his site continues to offer a pile of leaked diplomatic cables that have proven hugely embarrassing to the U.S., despite the best efforts from vigilante hackers and corporate service providers to shut it down.

But the most effective reach from Assange's group is still coming from the New York Times and Guardian newspapers, which got the entire trove of State Department cables before Assange's site started dribbling them out.

Today's installment from the Times details how arms trafficking in among America's enemies has continued largely unabated, despite the public pronouncements of improvement by the Obama administration.

In the Guardian, it's all about NATO, as leaked cables outline the battle plans for protecting the Baltic states from a Russian incursion. Sure, it's the sort of way-out thinking that military planners must engage in, but it will surely not help with deteriorating U.S.-Russia relations.

There's no telling what else lies in the Wikileaks cache at the Times and Guardian or what kind of things are included in a "poison pill" document stash that Assange says he gave to reporters and fellow hackers that is to be released if his site is shut down.

"Please describe how you intend to ensure that the members of your committee actively engage in the oversight hearing process in a constructive and productive manner."

-- Part of a survey from House Republican Leaders John Boehner and Eric Cantor to those members seeking committee chairmanships.

Putting Arizona Republican Jeff Flake on the House appropriations committee would be something like making Pat Robertson the grand marshal of a gay pride parade.

But that's exactly what House Republican leaders are suggesting as members prepare to vote for their key committee spots next year. Flake is a small-government conservative who has been a holy terror to earmarkers, pork-barrelers and the entire appropriations.

Flake is part of the slate of recommendations put forward by House Republican leaders in advance of today's caucus vote on key committee slots and is the best evidence so far that Republicans are serious about enforcing spending discipline.

Speculation on the committee had previously centered on veteran appropriators like Rep. Hal Rogers of Kentucky and their promises of accepting reform on earmarks and spending, so the proposed elevation of Flake came as something of a surprise.

But it fits with part of the new discipline being sought by Boehner and Cantor, who circulated a questionnaire to all those members seeking chairmanship that asked squirm-inducing questions about spending and tax policies.

"It's good to get promises, but it's better to make them put it in writing," one leadership aide told Power Play.