Higher taxes on wealthy unite Democrats

Even with signs of an economic recovery feeding optimism about President Obama’s reelection chances, congressional Democrats continue to run highly individual reelection campaigns independent of the president’s record and agenda.

Except on the issue of higher taxes for the wealthy, where they appear solidly unified across the political spectrum.

Gallery

After many months of fighting over tax and debt negotiations with Republicans in 2011, President Obama and Democratic allies in Congress have found common ground on an “economic fairness” agenda that has emerged as the single, most unifying Democratic idea of the election season. In its simplest form, it says millionaires should pay more taxes.

In a tight Wisconsin Senate race, the likely Democratic nominee is sponsoring legislation to impose a mandatory minimum tax of at least 30 percent on millionaires. In a newly drawn House district near Canton, Democratic Rep. Betty Sutton (D-Ohio) has taken to calling her wealthy businessman opponent a “tax evader millionaire.”

And in Massachusetts, Democrat Elizabeth Warren’s latest volley against the wealthy came over the weekend as she called for the resignation of JPMorgan’s CEO, Jamie Dimon, after revelations that its risky investments just cost the financial firm more than $2 billion.

“We’re on the same page,” said Sen. Sherrod Brown (D-Ohio), who spent a congressional recess in early May preaching the tax equity message at three different stops and who campaigned with Obama during his election kick-off in his crucial home swing state. “We’re gonna be with him, and he’s going to be with us.”

That is a striking development given how scattered the party remains on some issues. The Senate races in Virginia and Indiana are perfect examples. There will be no incumbents on the ballot in the fall, and the outcome of those races will be crucial to which party controls the Senate next year. The Democratic nominees in both those races, former Virginia governor Tim Kaine and Rep. Joe Donnelly (Ind.), have not fully embraced Obama’s support for same-sex marriage and have had to explain their differences with the president in recent days.

But the Democratic hope is that the fall elections will be almost entirely focused on economic issues, and they believe that requiring millionaires to contribute a larger share to help pay down the federal debt has put them on unusually strong footing in tough economic times.

Republicans say they will return fire in the “fairness war” by focusing on job growth, of the lack of it. Republicans contend the Obama administration’s policies created an unfair marketplace and is leaving an unfair amount of debt for the next generation. GOP leaders pounced on the most recent employment report, which showed just 115,000 jobs gained last month in the private sector. House Speaker John A. Boehner (R-Ohio) cited the report as “more evidence President Obama’s policies aren’t working for families and small businesses.”

The tax fight flared anew last week as Senate Republicans blocked legislation to keep interest rates on student loans low — objecting to the Democratic proposal to finance the new spending by closing what they call a tax loophole for millionaire doctors, lawyers and other wealthy professionals. Every Democrat supported the measure and the White House has been trumpeting the student loan problem across the country.

“We’re singing from the same hymnal now,” said Sen. Charles E. Schumer (D-N.Y.), the third-ranking Democratic leader and architect of the tax-the-millionaire strategy.

That’s a starkly different tone from the final months of 2010, when most of the party’s endangered incumbents declined appearances with the unpopular president, and when White House officials and Schumer were at open odds over how to handle the expiring Bush-era tax cuts. Schumer and some Democrats wanted to push a fight that would let taxes rise on those making at least $1 million and keep everyone else’s taxes the same, even if it meant a temporary hike in everyone’s taxes for the fight to play out.

Instead, Obama cut a deal with Republicans extending the tax breaks for all levels, reneging on a campaign pledge to increase taxes on Americans making more than $250,000 a year. Hill Democrats saw the deal as capitulation, and the anger and distrust that flowed from the moment resulted in an uneasy, and sometimes contentious, relationship between Obama and his nominal allies on Capitol Hill through the summer of 2011 and the debt ceiling negotiations.

Two key moments changed the dynamic and brought almost every Democrat on board: the decision to campaign against millionaires, and the GOP implosion over attempts to extend the payroll tax holiday in December, which created a chasm among Republicans.

Polls have repeatedly found that nearly 70 percent of the public supports the Democratic position of higher taxes on the wealthy.

Yet Obama’s pledge to extend the Bush-era tax cuts only for those earning less than $250,000 made sense to many Democrats, but was not as crisp in a campaign messaging effort. Schumer, who won re-election in 2010 with more than 65 percent of the vote, had floated the idea of increasing the proposed tax hike to millionaires at an October debate in Long Island — the sort of suburban area where $250,000 a year was a goal for many middle-class families.

By the fall of 2011, Obama abandoned further negotiations with Boehner and GOP leaders, beginning a campaign for his $447 billion jobs proposal, and Obama acquiesced to the Senate Democrats’ plan to pay for most of the jobs plan with a surtax on millionaires as opposed to the West Wing proposal of limiting tax deductions.

By January Obama fully embraced the millionaire message, unveiling his support for what he called the “Buffett Rule,” named after billionaire investor Warren Buffett — assuring that millionaires and billionaires pay at least 30 percent in federal taxes even if that income is earned through investments and other means usually taxed at a lower rate.

Absent full tax reform implementing the Buffett Rule, the White House position on Bush-era taxes remains that those earning $250,000 and above should get a tax hike while Schumer and some Democrats prefer sticking to the millionaire level, setting up potential for future fights. But for now the party is thematically unified.

Now, Sen. Sheldon Whitehouse (D-R.I.), up for reelection in November, is sponsoring the legislation in the Senate, as Rep. Tammy Baldwin (D-Wisc.), running for Senate, is carrying the legislation in the House. Baldwin and Brown even made a joint appearance together on MSNBC to push the Buffett rule.

“Fairness, the bottom line is, this is about fairness,” Baldwin said. Voters are saying “the system is rigged, there’s two sets of rules, one for them and a special set of rules for the very most wealthy among us, so it’s really a matter of fundamental fairness.”

 
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