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Tax-cut deal could revive Obama's chances in 2012

WASHINGTON — President Barack Obama's tax-cut deal with Republican lawmakers may help him lay the groundwork for his political revival heading into his 2012 re-election campaign — if it strengthens the economy as intended.

If economic forecasters are right, the deal will help the economy grow and could lower unemployment sharply over the next two years. That's the kind of record that can help first-term presidents win re-election even after rough midterm elections: Consider Ronald Reagan and Bill Clinton.

Obama needs to think strategically. A McClatchy-Marist poll last week showed that only 42 percent of voters — and 39 percent of independents — now approve of his job performance, and that if the election were held today, he'd be vulnerable.

However, the public really likes this tax-cut deal _ 60 percent approve and only 22 percent oppose it, according to a Pew Research Center poll released this week, a finding echoed Wednesday night by a Wall Street Journal/NBC survey that found approval of the tax cuts at 59 percent.

That poll also bolstered the potential political upside for Obama: 64 percent thought Obama had learned the correct lessons from the November midterm elections.

Moody's Analytics, a leading forecaster, projects that the tax-cut deal will boost economic growth next year by a full percentage point and add 2.6 million jobs to payrolls, driving down the unemployment rate to 8.7 percent from 9.8 percent today.

This Obama-revival strategy works only if the economy improves.

"If things get better, he will point to this," said political analyst Stuart Rothenberg. "If the economy comes back, he is going to be able to cite this and everything else he did over the past couple of years. He'll say, 'See, it's this compromise that did it.' "That's a big if," Rothenberg said of the economy. "That's the giant cloud over the re-election."

Obama's concession to Republicans to extend tax cuts for the rich drew criticism from liberals, who called him weak. However, cutting this deal also may help drive a wedge into the GOP presidential primary process, as potential GOP hopefuls position themselves on the compromise.

Among them, Mitt Romney and Sarah Palin have spoken against the deal, while Mike Huckabee and Tim Pawlenty appear to support it. Sen. John Thune, R-S.D. said it's "politically expedient" to criticize the deal from the sidelines, but Rep. Mike Pence, R-Ind., declared Wednesday that the compromise "is a bad deal for taxpayers, will do little to create jobs and I cannot support it."

Distancing himself from liberals, meanwhile, could revive Obama's appeal to centrist Democrats and independents who backed him in 2008 but who have cooled to him since — he'll need them again to win in 2012.

"He's got some Republicans in an awkward position of having to support the compromise, which doesn't necessarily work well with the tea party movement, so he's putting a bit of a wedge in the GOP," said Lee Miringoff, the director of the Marist Institute for Public Opinion at Marist College in Poughkeepsie, N.Y.

"And he's showing his bipartisanship. The cost is liberal Democrats, his party's base. In the long run, he probably figures that doesn't become a problem."

In addition, independent voters in the latest McClatchy-Marist poll said they consider reducing the deficit a much higher priority for the next Congress than cutting taxes, by 55 percent to 20 percent.

"To be successful, two things have to happen on the economic front: the jobs picture has to improve and there has to be some focus to the deficit," Miringoff said.

Betting on an economic turnaround and pledging debt-cutting initiatives next year, Obama recently has courted centrists.

He began a four-hour meeting Wednesday with the chief executives of major corporations by touting the tax cut deal's expected benefits for the economy. And he emphasized that "the primary engine of America's economic success is not government. It's the ingenuity of America's entrepreneurs. It's the dynamism of our markets."

Obama last week hosted Bill Clinton at the White House, and even gave the former president a long solo at the podium to bless the tax deal and Obama's acumen in crafting it.

Rothenberg said while it's tempting to read lots of strategy into Obama's tax deal, the decision was shaped by Republicans' apparent willingness to let unemployment benefits and middle-class tax cuts die unless they got the low tax rates they wanted for the rich.

"He avoids the worst case, which is a tax increase for everybody. He did what he had to do. He did what a leader does. This was kind of an adult doing what he had to do.

"He's clearly trying to redefine the administration as more reaching out to Republicans and bringing in CEOs, but I don't think that's going to be a never-ending direction of the administration," Rothenberg said. "I expect him to go back and forth on this. And there are going to be instances when he has to keep the base happy.

"I don't think this redefines who he is, and there's a long way to go before 2012."


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