President Obama’s theoretical willingness to continue the Bush tax cuts for the rich was first hinted at in a New York Times column by Peter Orszag on 6 September. Orszag had stepped down a few weeks earlier from his position as Obama’s director of the Office of Management and Budget, and he was known to be close to Obama; such a column, it was plain, would not have been written without the president’s encouragement. The novelty of the Orszag proposal was that Congress should extend the cuts for just two years.
The next day, a Times headline suggested that Obama would never stand for any kind of extension: ‘Obama is against a compromise on Bush tax cuts.’ But there was a complication. Obama wanted to let the lower rates expire for the top 2 per cent of earners, but stay in force for the remaining 98 per cent, whom he called ‘the middle class’. He was presenting himself as a statesman, uniquely concerned with the middle class, yet mindful of the budget deficit. The Republicans, Obama reasoned, by opposing him would show themselves both careless of the deficit and heartless toward the middle class.