There are plenty of reasons to be skeptical of the vow by Democrats that they are prepared to let the Bush tax cuts expire in full — and to come back and renew just the middle class ones later — in order to maximize their leverage in the coming “fiscal cliff” negotiations.
In 2010 Dems threatened to put Republicans on the spot with a vote on extending just the middle class cuts. But they punted that vote until after the election, and ultimately, Obama agreed to extend the high end cuts, infuriating many Congressional liberals.
But now the New York Times is taking the Dem threat seriously, devoting a big stand-alone article to it and gaming out what it means. The article does a nice job in explaining what specifically Republicans are protecting by insisting on an extension of the high end cuts:
“If you want to join Democrats to protect the middle class and avoid this fiscal cliff that we hear so much about, all you have to do is say yes,” [Harry] Reid said to Republicans. “Surely you can at least agree that 98 percent of the families in this country shouldn’t see their taxes go up.”
Numerically, Republicans and Democrats are not as far apart as the exchanges would suggest. President Obama has proposed allowing tax cuts to lapse on incomes over $250,000, raising the top two income tax brackets, allowing capital gains tax rates for affluent families to rise slightly and letting dividend income be taxed as ordinary income, as it was before 2003. Of the $5 trillion in tax increases that will ensue over 10 years if nothing is done, Mr. Obama’s plan would stave off all but $849 billion.
That tax increase on the rich would amount to 0.38 percent of the economy, considerably smaller than the tax increase secured by President Bill Clinton in 1993, which equaled 0.63 percent of the economy, according to White House calculations.
Another way to put this is that Republicans are so adamant about retaining their leverage over tax rates on a tiny slice of the tax pie, that they are unwilling to agree to an extension of low rates on all the rest of it. At risk of repeating myself, the Dem plan would extend low tax rates on all income up to $250,000, even that currently earned by those who make more money than that, the “job creators” included. The Dem plan would restore the Clinton rates only on the income above that amount that the top two percent of taxpayers pay; they would keep the low rates on all the rest of their income. The Tax Policy Center recently found that Republicans opposing this are mainly protecting the interests of the top one percent.
In the Times story, Mitch McConnell says: “Democrats in Congress are now saying that they would rather see taxes go up on every American at the end of the year than let about a million businesses keep what they earn now. This isn’t an economic agenda. It’s an ideological crusade.”
You have to admire McConnell’s ardent devotion to protecting low tax rates on income over $250,000. If this weren’t all about leverage and power for McConnell, it would be tempting to point out that it seems far more ideologically rigid to simply refuse to entertain any tiny increase in revenues from a tiny percentage of taxpayers no matter what, even though many of them would continue to pay low rates on much of their income in any case.
But this is all about leverage and power. And this should be an easy argument for Dems to win. As Dem Rep. Peter Welch puts it: “This is all about leverage being on the side of the Democrats. If Democrats want to use that leverage, we can’t blink.”
* Romney campaign divided over whether to release returns: Felicia Sonmez and Philip Rucker scoop:
The political pressure on Mitt Romney to release more of his personal income tax returns is causing some divisions inside the GOP presidential candidate’s camp, according to a Republican strategist close to the campaign. Although some advisers are arguing privately that Romney needs to release additional filings to curb the political fallout, others are resisting that suggestion, reflecting the candidate’s longtime reluctance to publicly disclose information about his personal finances.
As even some Republicans have pointed out, it seems pretty clear that this is no longer an “if,” but a “when.”
* Romney camp to make issue of Obama’s cocaine use? Oh, my:
In the next chapter of Boston’s pushback — which began last week when they began labeling Obama a “liar” — very little will be off-limits, from the president’s youthful drug habit, to his ties to disgraced Chicago politicians. “I mean, this is a guy who admitted to cocaine use, had a sweetheart deal with his house in Chicago, and was associated and worked with Rod Blagojevich to get Valerie Jarrett appointed to the Senate,” the adviser said.
This seems like it’s all about quieting GOP criticism of the Romney campaign’s inability to counter-attack effectively. But it isn’t going to make the tax returns issue go away, and Republicans will continue to press Romney to release them.
* The chorus grows louder: National Review: “Release the returns.”
* The Romney pushback intensifies: The Romney campaign releases a new ad slamming Obama’s stimulus for using taxpayer money to finance “windmills from China” and “electric cars from Finland.” This is apparently supposed to counter the attacks on outsourcing by Romney’s companies and on his own offshore accounts.
Of course, Bain’s activities were all about making a profit, while the stimulus’s goal — whatever you think about its effectiveness — was to turn the economy around, not to make Obama richer.
* Romney’s bogus “Finland” attack: Speaking of the stimulus funding electric cars from Finland, Glenn Kessler demolishes the claim, but the Romney campaign is clearly going to keep repeating it anyway
* Romney campaign worried about Bain attacks? Byron York has a must-read on how the vaunted “death star” Romney campaign is flaming out. This nugget is of interest:
In recent days, Romney’s aides have dropped hints that they believe pro-Obama outside groups — SuperPACs — have done a much more effective job against Romney than pro-Romney SuperPACs have done against Obama.
Do tell! The main attack coming from the leading pro-Obama super PAC Priorities USA, of course, is the onslaught designed to define Romney’s Bain years.
* Romney’s Latino outreach continues: The Romney campaign is also out with a new ad featuring Romney’s Spanish speaking son claiming that his dad views America as a “nation of immigrants” and vowing a ”permanent solution” on immigration.
As far as I know, this is the first Romney ad directly engaging the immigration issue. Reminder: Romney has still not said whether he’ll repeal Obama’s ban on deportations of DREAM eligible youth, something that could impact hundreds of thousands of people.
* Romney and Obama’s alleged attack on “success”: As Paul Krugman points out, there is an actual policy dispute underlying the fake controversy over Obama’s alleged attack on business-owners and on Romney’s success:
Romney wants us to celebrate the success of people like him, even though their success doesn’t seem to have benefited ordinary families, and even though he stands for policies that would aggravate the gap between a fortunate few and everyone else. And then he accuses Obama of dividing America.
As I noted here yesterday, the dream that one day Americans will finally realize that Obama has nothing but disdain for their hard work and for American free enterprise in general will never, ever die.
* And would Romney’s returns show he paid very low tax rates? A tax professor games out more of the possible techniques he may have used to reduce his tax rate. Even if there are no signs of ”chicanery” in the returns, as the expert puts it, explaining a very low rate could prove politically damaging, which may be why Romney has calculated that not releasing the returns is his only choice.