I’m told that national Democrats are planning to mount a major campaign to hammer Republican candidates — particularly ones in swing areas — over a specific aspect of the Paul Ryan budget: The possibility that it could result in middle class tax hikes.
The idea, a source tells me, is to tie this back to the political trap that ensnared Mitt Romney during last year’s campaign — his inability to explain how his massive tax rate cuts, including on the rich, would be paid for without closing loopholes enjoyed by the middle class.
The Ryan plan, of course, promises to cut everyone’s taxes, by collapsing all tax brackets into just two brackets, with the top earners seeing their rates slashed to 25 percent as a goal, and others paying a 10 percent rate. But Ryan’s plan doesn’t say how this would be paid for, claiming that the process of eliminating loopholes and deductions should be left to committee. As one tax expert explained to me the other day, because of this and other lingering questions about how exactly the tax cuts would be structured, it’s impossible to say at this point whether those tax cuts could be paid for without hitting middle class loopholes.
During Campaign 2012, Romney proposed to slash tax rates across the board by 20 percent, which would have hugely and disproportionately benefited the rich. The tax cuts were supposed to be paid for by closing loopholes and deductions, but the Tax Policy Center found that even if you close all loopholes enjoyed by the rich, it still wouldn’t generate enough to cover the cost of the tax cuts. So you’d have to hit some middle class loopholes to keep the plan’s promise of revenue neutrality — offsetting the tax cuts enjoyed by the middle class, and then some, meaning a tax hike for them.
When Romney found himself caught in this trap, it was devastating for him, because it perfectly laid bare the core priorities animating the GOP. It showed that the party was so committed to reducing tax rates on the rich — already a deeply unpopular position — that it was willing to further burden the middle class if necessary to do so, which would have been even more unpopular.
According to the liberal leaning Center on Budget and Policy Priorites’ analysis of the Ryan budget, it would cut tax rates by twice as much as Romney’s plan would have. That’s because the baseline is now the higher tax rates paid by the wealthy as the result of the fiscal cliff deal — current law — which makes Ryan’s tax rate cut much bigger than Romney’s, with no indication of how it would be paid for.
And so, Dems are hoping to use the Ryan budget to ensnare Republican candidates, particularly ones in marginal districts, in the same trap that tripped up Romney. Only this time it could potentially be worse. After all, last time Republicans had just routed Democrats in the 2010 elections, and could plausibly argue that core questions about tax fairness, the size of government, and who should pay for it hadn’t been settled by the electorate. But now Republicans have committed themselves to this same set of policies and priorities after running on them in a presidential race and multiple Senate and Congressional elections and losing decisively across the board.