So is it, in fact, 1994 all over again? The atmospherics are familiar. Then as now, we have a Democratic president who’s been whacked in the midterms for alleged liberalism and appears to be tacking to the center to work with victorious Republicans. That Clinton-era analogy was much in the air this week in the wake of President Obama’s deal with Republicans to extend the Bush-era tax cuts, for everyone, in order to get a 13-month extension of unemployment benefits and middle class tax cuts.
But I think the more illuminating analogy lies in 1990, with George Herbert Walker Bush, not in ’94 with William Jefferson Clinton. In the summer of 1990, the federal deficits that had grown under Ronald Reagan were threatening the American economy. But Bush had made his refusal to raise taxes a centerpiece of his 1988 campaign: “Read my lips: no new taxes.”
That was then. Two years later, the president agreed to raise tax rates in exchange for so-called pay-as-you-go rules that required future spending to be offset by compensating budget cuts. It was the beginning of the fiscal discipline that helped create the prosperity of the 1990s.
But Bush, of course, was dead to the Republican true believers. And he knew it. He clearly grasped that breaking the no-new-taxes promise could cost him re-election. But he did what he thought was right anyway. Obama is facing similar troubles now with his liberal base, and has, I think, dealt with reality in the same constructive, if politically costly, spirit that animated George Bush. Obama compromised on the big tax cuts for unemployment extension, which was vital, and for lower rates for the middle-class, which are desirable in a recession. The left doesn’t like it, but the right didn’t like Bush’s decision 20 years ago — a decision vindicated by subsequent experience.
If you play this analogy out, Obama, like Bush, may well be a one-term president, whereas Clinton came back and won in 1996. There are worse things, however, than losing re-election yet being well-regarded in the light of history. President Obama may make that point next year when he awards the Presidential Medal of Freedom, the nation’s highest civilian honor to George Herbert Walker Bush. It’ll be a moment to watch.