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LAMBRO: Backpedaling, the left swerves right

Chastened president and Democrats flirt with ideas for growth

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Liberalism was running at full throttle in the Age of Obama until it collided with the 2010 midterm elections, when the American people yelled "Stop!"

It is fair to say that tax-and-spend liberalism is 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 President Obama was talking compromise with the Republicans, backing off his opposition to the George W. Bush tax cuts and stopping attacks on House GOP leader John A. Boehner, now the speaker of the House, who plans to undo much of what Mr. Obama has signed into law.

Mr. Obama ran on terminating President Bush's income tax cuts for wealthier taxpayers, raising the capital gains tax on investors and raising the death tax on "millionaires and billionaires." But he agreed to a Republican deal to preserve and extend all of the cuts 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," Mr. Obama said last week.

There were more political changes to come that suggested a broader midcourse correction.

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

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

But Mr. 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 Mr. Daley - who urged Mr. 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 was 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," Mr. Cuomo said last week in his first State of the State address in what has long been the bastion of American welfare-state liberalism. "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.

Mr. 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."

Mr. 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 Mr. 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 of the Nancy Pelosi and Harry Reid spending binge.

One of them is Sen. Claire McCaskill of Missouri, who was a blank check for Mr. Obama's agenda but says she is 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.

Ms. McCaskill, along with at least a half-dozen other Democrats in the Senate, is facing a tough re-election 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 Mr. Obama's closest liberal allies is questioning the new health care law because she fears defeat in the next election - and several of her colleagues do, too - it could mean Obamacare is in deep trouble.

Donald Lambro is a syndicated columnist.

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