It’s been tough to keep abreast of events this week in Washington from post-Communism central, but from this end of the big pond (Beijing right now) it looks like President Obama has pulled out a clear political win that will bode well for his run in 2012. Despite the stiff opposition from loyal progressive liberals and a few Republicans, the votes in the U.S. House and Senate seem to show that the diehard liberal wing of the Democratic party is, in fact, a functioning minority. The November 2010 elections, riding the wave of the Tea Party, forced Obama to hang up his ideologically progressive liberal party hat (temporarily) and revert to a true-pragmatist political style. This outcome is not all that surprising, because Obama is a populist as well as a progressive.
Still, the tiger hasn’t changed his stripes. This is a reprieve. It will be up to the Congress to use this opportunity to drive real tax reform and, we may hope, sculpt lasting pro-growth tax reform in the run-up to the 2012 presidential election. The fate of the Republican party may hinge on its ability to accomplish this kind of reform: A simple, fair, pro-growth tax policy is a fundamental value of the Tea Party movement that propelled Republicans to their sweeping victories despite deep-seated skepticism about the GOP’s ability to deliver (they were just better than the D’s — for now). Those Tea Partiers are going to be looking for some real results. This tax package, while deeply flawed in some areas (see my colleague Anthony Randazzo’s thoughts on this here), at least sets up a framework that could lead to substantive reform while forestalling the economically debilitating effects of an automatic rise in income-tax rates without any reform in the tax structure.