Are Democrats finally on the verge of breaking the GOP’s fervent opposition to raising tax rates on the rich, perhaps the single greatest obstacle to compromise between the two parties, and a defining feature of our politics, throughout the Obama era?
Many on the left, myself included, have repeatedly suggested Republicans will buckle. But now this view is being second by Byron York, the conservative writer who is well connected among Republicans. His piece this morning is significant for what it tells us about the true state of the fiscal cliff talks:
Republicans will cave on the question of raising the tax rate for the highest-income Americans. The only question is whether they do so before or after the government goes over the so-called fiscal cliff.
First, many in the GOP do not believe that raising the rate on top earners from 35 percent to 39.6 percent (the rate before the Bush tax cuts) would seriously damage the economy. Second, they know that most Americans approve of higher taxes on the top bracket, and President Obama, having campaigned and won on that platform, seems dead-set on higher rates. Third, they fear that if the government does go over the cliff and Democrats propose re-lowering taxes for everyone except the highest earners, Republicans would be in the impossible position of resisting tax cuts for 98 percent of the country on behalf of the top 2 percent.
York argues that GOPers should recognize the inevitable, declare their willingness to give ground on rates, and use that to pressure Dems for major concessions on entitlement reform. This is important, for several reasons. First, it suggests many Republicans know that they will ultimately cave on rates. Second, Republicans know that raising tax rates on the rich won’t really hurt the economy. Both of those constitute a break with public positions the GOP has long held to be nothing short of sacred.
Third, and perhaps most important, York tells us that Republicans are coming around to these positions specifically because they realize Obama will not back down and because Democrats appear ready to go over the cliff rather than give ground on this core priority. This confirms, as I noted yesterday, that the willingness to take the plunge if necessary is central to maintaining a situation that is fundamentally unbalanced in a way that gives the leverage to Democrats.
Let’s say we do go over the cliff, and Dems come back and move to pass just an extension of the middle class tax cuts. Is there any way Republicans can vote against it? They did in 2010, when the House held a similar vote.
But this time, things would be very different. A look at the new Washington Post poll explains why: A majority of Americans, 53 percent, will blame Congressional Republicans if the two sides fail to reach a fiscal deal, versus only 27 percent who will blame Obama. Among independents, the numbers are 52-21. Meanwhile, 60 percent say going over the cliff would have a negative effect on the economy.
If we do go over the cliff, and the public broadly holds Republicans responsible for it, after everyone’s taxes have gone up, is there any conceivable chance they’d vote against renewing tax cuts for 98 percent of taxpayers? Anything is possible, but it certainly doesn’t look like it. The remaining question is what Republicans will be able to extract in exchange in the way of entitlement cuts, and what Dems are willing to give up. That’s obviously important. But on the core question of tax rates going up for the rich, it really looks increasingly like, as York says, it’s not a matter of “if,” but “when.”
* Republican admits GOP is “in a box”: Alexander Bolton takes note of a fascinating dynamic: Mitch McConnell’s decision to allow the Senate to pass just a middle class tax cut over the summer — which was good politics for his members — has made life more difficult for House Republicans, who are now being pressured to pass the Senate bill. Note this concession:
“It certainly heightened the pressure on the House,” said Rep. Steven LaTourette, a Republican from Ohio. “We’re in a political box.”
Indeed, as noted here yesterday, the only way out for John Boehner may be hold out until the end until Republicans “force” him to agree to pass this Senate bill.
* The center has shifted in the fiscal debate: Republicans claim their offer yesterday constituted a middle ground position, and claim it is modeled on that of Erskine Bowles. But here’s the counter-argument, and it’s worth keeping in mind:
Democrats — including Bowles — and independent budget analysts argued that the actual middle ground between the two parties has shifted dramatically since the November election, when Democrats made gains in both chambers of Congress and Obama held on to the White House after promising to raise taxes on the rich.
Yup. Given that solid majorities (including of independents and moderates) want tax hikes on the rich to be part of our fiscal solution, you could argue the Dem position actually is the middle ground, since many experts think raising high end rates is the only way to ensure that revenues play a serious role in deficit reduction.
* Obama plan has more deficit reduction: Steven Rattner’s New York Times op ed will probably drive some discussion today, since he is a self described “deficit hawk” and says both sides are falling short on the deficit. So please note that he plainly states that Obama is the only one who has offered a “formal plan,” and that his proposals would reduce the deficit by more than the informal ideas suggested by Boehner yesterday would.
* Boehner’s survival on the line? Matt Lewis has an interesting look at the challenges Boehner faces in the fiscal cliff talks, which are rooted in the Speaker position’s institutional loss of power and the unpredictability of the Tea Partyers, and how this is a test of Boehner’s legacy and survival.
Despite my argument yesterday that Boehner has a way out — fighting hard until the very end until fellow Republicans force him to cave — Lewis suggests this could put Boehner’s Speakership at risk.
* Conservatives blast Boehner over fiscal cliff: Conservative groups are already hammering Boehner over his proposal yesterday, claiming it raises taxes on “the American people” and doesn’t do enough to “reform” entitlements. The merits of this complaint aside (the priorities on display from the right here are simply remarkable), it’s another sign of just how difficult a spot Boehner finds himself in with time running out.
* Keep an eye on the payroll tax cut holiday: Good point from Matthew Yglesias: If we go over the cliff, Congress may come back and extend just the middle class tax cuts, but that still leaves the fate of the payroll tax cut in limbo, because it doesn’t have that many champions among leading Democrats. Indeed, the payroll tax holiday may die even if a fiscal deal is reached — this one deserves more attention from the left.
* Another approach to our fiscal problems: The Center for American Progress releases a new report offering a different set of policies that would raise $1.8 trillion in new revenues. The basic overall goal is to achieve deficit reduction while moving the tax code in a more progressive direction, with ideas such as overhauling deductions so they favor middle class families as much as wealthy ones. Full report here.
* And the latest on the GOP campaign against Susan Rice: The Wall Street Journal has a detailed look at the process behind the talking points Rice employed just after the embassy attacks — which John McCain continues to (claim to) find problematic. The key finding:
The officials said the first draft of the talking points had a reference to al Qaeda but it was removed by the Central Intelligence Agency, to protect sources and protect investigations, before the talking points were shared with the White House. No evidence has so far emerged that the White House interfered to tone down the public intelligence assessment, despite the attention the charge has received.
That seems tangentially relevant to McCain’s criticism.