Donald Lambro
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Liberalism was running at full throttle in the Age of Obama until it collided with the 2010 midterm elections.

It is fair to say that tax-and-spend liberalism is now in somewhat of a retreat in many quarters of our body politic as Democrats appear to be changing their tune on a number of fronts.

No sooner had the White House counted its losses in Congress, governorships and state legislatures, than was President Obama talking compromise with the Republicans, backing off his opposition to the Bush tax cuts, and stopping the attacks on House GOP leader John Boehner, now the Speaker of the House, who plans to undo much of what Obama has signed into law.

Obama ran on terminating President Bush's income tax cuts for wealthier taxpayers, raising the capital gains tax on investors, and hiking the death tax on "millionaires and billionaires." But he agreed to a Republican deal to preserve and extend all of these, and cheerfully signed it into law, saying the tax cuts would spur economic growth and create jobs.

"The American people are expecting us to hit the ground running and start working with this new Congress to promote job growth and keep the recovery going," Obama said last week.

But there are more political changes to come that suggest a broader midcourse correction.

Obama, who didn't have a single businessman or businesswoman in his White House or Cabinet, reached into the business community to name William Daley, former Commerce secretary in the Clinton administration, to be his new chief of staff and, it appears, a close economic adviser as well.

Daley, a party centrist, was a driving force for the North American Free Trade Agreement and free trade expansion under Bill Clinton, a policy that Obama flogged repeatedly, particularly before labor union audiences. He also comes from a long line of Wall Street investment houses like JPMorgan Chase that Obama has been attacking for the past two years. MoveOn.org is not happy. The U.S. Chamber is ecstatic.

But Obama, who suddenly seems to be embracing the corporate world he has long used as his political punching bag, now plays up the fact that his new chief of staff has "led major corporations; he possesses a deep understanding of how jobs are created and how to grow the economy" -- a talent that has been sorely missing in the West Wing.

Republican House and Senate leaders are quietly preparing new tax cut legislation to provide further incentives to boost economic and job growth and Daley -- who urged Clinton to sign a Republican bill cutting the capital gains tax -- will be a major player in the White House on tax policies.

Democratic backpedaling on tax-and-spend issues re also in full swing in some state capitals, most notably in New York where a new governor, Andrew M. Cuomo, is calling for tax cuts to breathe new life into the Empire State's lackluster economy.

"We need radical reform, we need a new approach, we need a new perspective," Cuomo said last week in his first State of the State address. "And we need it now."

The governor "mentioned the word 'tax' or 'taxes' 21 times, mostly to denounce them and promise to lower them," a shocked New York Times reported.

Cuomo, who faces a $10 billion budget deficit, wants the state's agencies, authorities and departments slashed by 20 percent, state worker salaries frozen, the growth of government restricted to the rate of inflation, Medicaid cut, and limits placed on property taxes.

"What made New York the Empire State," he said, "was not a large government complex. It was a vibrant private sector that was creating great jobs."

"New York has no future as the tax capital of the nation," he lectured his state legislature. "Our young people will not stay, businesses will not come; this has to change. Put it simply, the people of this state simply cannot afford to pay more taxes, period."

Cuomo has closely studied the results of the last election and has concluded that the voters have had enough of big government and ever-higher taxes. Is Obama listening?

Back here in Washington, some of those liberal Democrats are having second thoughts about what they voted for over the past two years during the Pelosi and Reid spending binge.

One of them is Sen. Claire McCaskill of Missouri who once was a blank check for Obama's agenda, but says she is now thinking about scrapping the provision in Obamacare that forces uninsured Americans to buy health insurance or pay a penalty.

"There's other ways we can get people into the (insured) pool -- I hope -- other than the mandate, and we need to look at that," she said in an interview on MSNBC.

McCaskill, along with at least a half dozen other Democrats in the Senate, is facing a tough reelection race in 2012, and polls show Obamacare is unpopular in her state, with 75 percent of the voters opposed to the individual mandate. When one of Obama's closest liberal allies is questioning the new health care law because she fears defeat in the next election -- along with several of her colleagues -- it could mean Obamacare is in deep trouble.

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Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.