President Obama just finished up a press conference in which he defended his controversial deal with Republicans to extend all of the Bush-era tax cuts, including those for households making over $250,000 per year.
Many Democrats and especially the liberal wing of the party think Obama is giving up too much in agreeing to keep in place the cuts for wealthier taxpayers. In exchange, Republicans have agreed to stop holding up an extension of the cuts for middle class households and have accepted maintaining long-term unemployment and additional tax benefits for lower-income individuals.
Here's an extract from Obama's statement about the agreement, posted on the White House site.
So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. The American people didn’t send us here to wage symbolic battles or win symbolic victories. They would much rather have the comfort of knowing that when they open their first paycheck on January of 2011, it won’t be smaller than it was before, all because Washington decided they preferred to have a fight and failed to act.
And here's Krugman:
Think about the logic of the situation. Right now, the Republicans see themselves as successful blackmailers, holding a clear upper hand. President Obama, they believe, wouldn’t dare preside over a broad tax increase while the economy is depressed. And they therefore believe that he will give in to their demands.
But while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils.
It should be noted that Krugman today wrote on his blog that the deal is not as bad as he first speculated, but still bad enough to turn down.