As you’ve heard, Senate Democrats are reported to be divided and uncertain about how they will approach the coming standoff over the scheduled expiration of the Bush tax cuts. With that whole “fiscal cliff” looming, some Dems are disagreeing over the proper threshold for the high end cuts ($250,000, or $1 million?) and others are skittish about whether to let them expire at all — even the ones on the rich.
But a few progressive Dems seem to be quietly floating another scenario entirely: letting all the tax cuts expire, coming back and voting on recutting middle class tax rates, and challenging Republicans to vote against the Dem-proposed tax cuts.
Remember: If Democrats do nothing, all of the Bush tax cuts will expire. And Dems recognize that their leverage turns heavily on whether they appear willing to let them all expire. So progressives like Sheldon Whitehouse and Jeff Merkley are suggesting, in interviews with David Dayen, that perhaps it should come to that, if necessary.
As Merkley put it, “you can’t give up your leverage in advance.” Whitehouse added that if the tax cuts were allowed to expire, it would break the hold that Grover Norquist’s anti-tax fundamentalism has on large swaths of the GOP:
“After January 1 creates a real benchmark moment for the Republicans who are sworn to Grover Norquist. Because once January 1 happens, his theory that the Bush tax cuts are going to be extended indefinitely begins to look pretty foolish when they’re actually not there ... What was a god-awful tax increase becomes a wonderful tax decrease, and it’s the same thing.”
Interestingly, some Republicans have quietly come to a similar conclusion, according to the New York Times:
Other Republicans have quietly suggested that all of the Bush-era tax cuts would have to lapse temporarily. That way, reinstating most — but not all — of them would be scored as a tax cut, both by the Congressional Budget Office and by Americans for Tax Reform, a group led by Grover Norquist that is the keeper of the “no new taxes” pledge virtually every Republican has signed.
There are, of course, plenty of reasons to doubt any of this will happen this way. It’s unclear how much support this idea, even tentatively, has among Senate Democrats, if any. Dems and the White House adamantly do not want to be seen as supportive of letting the tax cuts expire on the middle class. And while there are reasons Dems have more leverage this time than usual, Dems have not exactly revealed themselves to be willing to risk high stakes brinkmanship on this issue in the past. Still, it’s an interesting dynamic that’s worth watching.