Republicans want to preserve the cuts for taxpayers at all income levels, a position that Biden said would boost budget deficits by more than $1 trillion over the next decade in order to protect tax breaks worth $160,000 a year to the average millionaire.
“The other side claims this is the best way to grow the economy: If you take care of the very wealthy, everything will, as that old phrase goes, trickle down,” Biden said. “The problem is we’ve seen that movie before and we know how it ends. . . . What happened was the rich got richer . . . but most Americans got nailed.”
Republicans, in turn, accused President Obama and congressional Democrats of risking the nation’s economic health by threatening to let all the tax cuts expire unless the GOP capitulates. Economists generally agree that full expiration of the tax cuts, along with implementation of sharp cuts in federal spending also set for January, would plunge the nation at least briefly back into recession.
“Our friends on the other side are practicing what could best be described as Thelma and Louise economics: Let’s just march the whole country right off the cliff and see how that works out,” Senate Minority Leader Mitch McConnell (R-Ky.) said during a news conference at the Capitol.
“Well, I think we all know what’s going to happen if we do that,” he said. “We don’t think we ought to be playing Russian roulette with the American economy.”
The debate over taxes has become a focus of the presidential campaign, offering a stark contrast between Obama’s vision for improving the sluggish economy by investing in the middle class and GOP challenger Mitt Romney’s pledge to put people to work by clearing a path for the nation’s wealthy job creators.
But while the din of that rhetorical battle reverberated throughout Washington, the legislative battle set for Wednesday is largely meaningless. Neither side has the 60 votes necessary to overcome a filibuster and push its preferred tax package to final passage. Leaders in both parties acknowledge that the issue of what to do about the expiring tax cuts enacted during the George W. Bush administration will be resolved only after the November elections.
For now, Senate Democrats hope to muster 50 votes for their $250 billion proposal to extend the middle-class tax cuts through 2013, an outcome that would permit them at least to claim majority support and press the argument that Republicans are holding the middle class hostage. At best, Republicans antsy about voting against tax cuts could drop their filibuster threat, permitting Democrats to push their bill through the Senate and challenge the House to reject it.
The Republican-controlled House, meanwhile, was laying plans to vote next week on a $400 billion one-year extension of the tax cuts virtually identical to the one proposed by Senate Republicans. House leaders also unveiled a plan to create a fast-track timetable for overhauling the tax code next year that would require the House Ways and Means Committee to produce a tax reform bill by the end of April.
Both measures are expected to easily pass the House, but neither has much hope of approval in the Senate. The ideological stalemate leaves the nation facing what Federal Reserve Chairman Ben S. Bernanke has called a “fiscal cliff” in January, when a temporary payroll tax cut and a host of other temporary tax breaks will expire alongside the Bush tax cuts. Together with sharp scheduled spending cuts at the Pentagon and other federal agencies, the fiscal cliff threatens to siphon $600 billion out of the economy next year.
On Tuesday, even as Democrats complained that Republicans had failed to include an extension for a variety of smaller middle-class tax cuts in their bill, such as a credit for college tuition, White House economic adviser Jason Furman confirmed that the White House has no plans to extend the payroll tax cut, which boosts paychecks by 2 percent for virtually every American worker.
“That was always intended to be a temporary measure to support job creation and economic growth as the economy was beginning to strengthen,” Furman said on a conference call with reporters. “It’s not something we have at this stage called for extending into next year.”