Sun, Dec 25, 2011 - Page 7 News List

ANALYSIS: Obama wins on tax cut — a gain hard to sustain

Reuters, Washington

For US President Barack Obama, it was a political victory that has given next year’s re-election campaign an identity: champion of the middle class.

In facing down Republicans over a two-month extension of the payroll tax cut for 160 million Americans, Obama managed to cast conservative Republicans in the House of Representatives as symbols of the dysfunction that often has paralyzed a divided Congress.

However, in the months ahead, the president will face huge challenges in maintaining the momentum he now enjoys.

The debate over a longer extension of the payroll tax cut — and extended unemployment benefits for millions of Americans — will come up again shortly after Congress returns from the holiday recess.

In Round 2, Obama and Democrats almost certainly will face a better-organized opposition. The Republicans likely will be determined to fight for more budget cuts and to preserve existing tax breaks for the wealthy that the Democrats want to end — before agreeing to extend the payroll tax cut through next year.

Obama is also likely to face a more united Republican Party beyond Washington.

The tax cut debate in Congress this week took place as the Republican candidates for president were bashing one another in Iowa and New Hampshire, states that vote early in their party’s nomination process.

As next year goes on and Republicans settle on a presidential nominee — former Massachusetts governor Mitt Romney is seen as the favorite despite his struggles so far in the campaign — the party will be more unified in targeting Obama, analysts say.

Obama’s run to re-election could also be derailed by the fragile economy, which in recent months has shown signs of recovery as some real-estate and labor markets have stabilized.

But the nation’s unemployment rate is still at 8.6 percent, which could mean trouble for the president’s re-election prospects.

In an interview on Thursday, Romney made it clear that his campaign would focus on what he called Obama’s failure in dealing with jobs and the economy.

Obama is likely to face the question that former US president Ronald Reagan posed to voters in his first successful run for president in 1980 against Democratic incumbent Jimmy Carter: Are you better off now than you were four years ago?

“In the end, that Reagan question ... will still be the question that people are going to debate when they vote in November of 2012, unless the Republicans put up an unacceptable alternative,” said Stephen Wayne, professor of government at Georgetown University.

Before leaving Washington on Friday to join his family for a holiday vacation in his native Hawaii, Obama laid the groundwork for his next round with Republicans in Congress — and made it clear that his populist theme would continue.

He called on Congress to work “without drama, without delay” to extend the payroll tax cuts and unemployment benefits for a full year.

The year ahead, he said, would be a “make or break moment for the middle class in this country,” making it clear that he would cast himself as their defender.

By striking a populist chord to build public support, Obama ended what essentially was a year-long losing streak.

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