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Iraq Policy: Why Republicans And Tax Foes Worry

Monday, 10 Sep 2007 | 3:43 PM ET

The report to Congress by Gen. David Petraeus, who is addressing a gathering of House members as I write this post, concludes that the Bush administration's troop surge in Iraq is achieving many of its military objectives. It will be used to justify the continued presence of large numbers of U.S. soldiers in the conflict, even if Petraeus has indicated the numbers might be able to recede to pre-surge levels.

The report is good news for President Bush. But it's bad news for those in the Republican Party and the business community whose aim is avoiding tax increases over the next few years.

Say what? I will explain.

Polls suggest Petraeus has more credibility with the American people than the president does. The administration had already gained momentum on Capitol Hill, consolidating Republicans and defusing the anti-war fervor of Democrats, through late summer reports previewing Petraeus' message. Congressional Democrats know that they don't have the votes to stop the war--and that it is politically risky to waste too much energy trying. The disruptive anti-war protests at Petraeus' testimony, which are unlikely to be received favorably by average Americans, won't encourage Democrats to try any harder. In other words, Bush is on track to achieve his goal of pursuing his war strategy through the end of his administration.

And here's why that's bad news for Republicans and tax-hike foes. Bush may be pleased to gain latitude to pursue his strategy, but Republicans actually on the ballot next year face deeper trouble. The war has soured Americans' mood; voters' feelings about what to do about Iraq now are complex, but there's no doubt that Iraq has fueled desire for change.

Since the Washington status quo is mostly defined by the occupant of the White House, desire for change is bad for Republicans--those seeking House and Senate seats as well as those seeking the presidency. The GOP had hoped to put Iraq in the rear-view mirror when voters confront their political choices in fall 2008, and there's little chance they'll be able to.

Democrats in Congress are already exploring, in the name of adding revenue as well as promoting tax fairness, tax increases on private equity executives as well as the most affluent taxpayers generally. So long as a Republican sits in the White House and holds a veto pen, that's not likely to happen. But the lift that Gen. Petraeus is providing the Bush administration this week makes it less likely that a Republican will occupy 1600 Pennsylvania Avenue in 2009, and more likely that Democrats will have stronger House and Senate majorities.

Questions? Comments? Write to politicalcapital@cnbc.com.