Everyone knows the president’s middle-income tax proposal will never make it through the
House—and that’s just fine with lawmakers on both sides of the aisle. Patricia Murphy on
why now is the perfect time for the tax debate.
Two hours before President Obama stood in the East Room of the White House to call for an
extension of the Bush tax cuts for middle-income Americans, House Speaker John Boehner
fired off a statement panning the idea and declaring Obama “asleep at the switch” of the
American economy.
Boehner’s prebuttal confirmed what everybody in Washington, including the president,
already knew—that Obama’s pitch for half a loaf of Bush tax-cut extensions is going
absolutely nowhere on Capitol Hill as long as the GOP runs the House. Indeed, that was the
point of the whole exercise on both sides of the aisle: to remind voters of what is at
stake in the November elections.
For Americans watching from outside the Beltway, proposing an idea that everyone knows is
doomed might seem like a colossal waste of time at best and an example of Washington
gridlock run amok at worst. But for Democrats and Republicans in the nation’s capital, the
president’s go-nowhere proposal is just the opposite—a chance to have exactly the right
debate at exactly the right time.
The tax debate “is more important now than before because voters are starting to pay
attention,” says Ron Bonjean, a Washington consultant and former adviser for the
Republican House and Senate leadership.
Bonjean said upcoming votes on the Bush tax cuts can and likely will be used against
Democrats in campaign commercials and on the trail leading up to the November elections.
Republican candidates, he said, have nothing to lose if they frame their no-new-taxes
position as fighting for small businesses that could get hit by the higher tax rates under
Obama’s proposal.
“Republicans are so clearly on the wrong side of every single poll. They are so
transparently only interested in tax cuts for millionaires and billionaires.”
“There is no downside to them to support extending the tax cuts,” Bonjean said.
Democrats, on the other hand, could have a tougher hand to play: “Saying, ‘The economy is
bad, so let’s raise taxes’ in the last few months of the campaign, that’s not a message
that’s going to work.”
Not surprisingly, Democrats in the White House and on Capitol Hill see the tax battle very
differently. But they are just as eager as Republicans to have the fight in front of
voters.
“Republicans have failed to put forward a plan to create jobs or end the outsourcing of
American jobs and continue to waste valuable time on bills to nowhere,” Democratic leader
Nancy Pelosi said in a statement. “We must work together to extend tax cuts for the middle
class, put people to work, and grow our economy.”
A Democratic leadership aide put it more bluntly: “This is an easy debate for us.
Republicans are so clearly on the wrong side of every single poll. They are so
transparently only interested in tax cuts for millionaires and billionaires.”
A number of polls, including Gallup’s most recent survey on the tax issue, supports
Democrats’ confidence in pushing their position to extend the tax cuts only up to
$250,000. In the Gallup poll, 62 percent of respondents said upper-income Americans are
“not paying their fair share,” while just 25 percent said the top earners are “taxed
about right.”
Gallup editors noted that that Republicans’ efforts to extend the tax cuts for all
Americans could be especially dangerous if they are seen fighting for wealthy Americans at
the expense of the middle class, a risk that GOP aides say they are well aware of. They say
privately that that distinction is the driving force behind their message that Republicans
are fighting for small businesses that would get hit under the Obama proposal, not for the
billionaires in the same position.
In his remarks Monday, Obama said he will sign a tax-cut bill as soon as Congress sends it
to him. But House and Senate leaders have no plans to negotiate a real agreement before
Election Day on Nov. 6. Instead, both parties will vote on separate proposals that the
other side says it will quickly reject.
Republican aides told The Daily Beast that the House will vote in a one-year extension of
all of the Bush tax cuts before the end of the month, along with instructions for Congress
to reform the entire tax code. Democratic Senate aides say the Senate also will vote to
extend the Bush tax cuts before August, but will only consider the president’s proposal to
extend the cuts for incomes of $250,000 and below.
In the meantime, all of the Bush tax cuts, for all Americans, are scheduled to expire on
Jan. 1, 2013, along with the temporary 2-point cut to the payroll tax, which will expire on
the same day. Combined, the tax increases would be a multitrillion-dollar hit to Americans
’ incomes, but at the moment, no one in Washington is talking about that.
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