The leaders of the Congressional Progressive Caucus want a meeting with Nancy Pelosi to urge her to hold a vote on the Bush tax cuts for the middle class, excluding the tax cuts on those making over $250,000. Raul Grijalva and Lynn Woolsey point out in the letter to Pelosi that this proposal would save $680 billion dollars over the next ten years, close to $1 trillion if you include the interest on the debt.
The Treasury Department estimates that President Obama’s tax proposal will collect $41 billion in additional revenue in Fiscal Year 2012 and $680 billion over the next ten years. If we are serious about cutting our budget deficit, we must allow the Bush tax cuts for the wealthiest to expire. Before President Bush’s tax cuts were enacted, the federal budget had a steadily rising surplus that the Congressional Budget Office (CBO) estimated would hit 5.3 percent of GDP by 2011. Within a few years of the enactment of the Bush tax cuts, these projections turned to deficits.
Therefore, we believe extending the Bush tax cuts would be a giveaway to the nation’s wealthiest people and would significantly increase government debt. This debt, in turn, will be paid by the lower and middle classes through increased interest payments and decreased social services for generations to come. This astronomical sum could instead be used to close our budget deficit. It is critical that we pass President Obama’ s middle-class tax proposal without providing an even greater lift for the wealthiest Americans who don’t need it.
Grijalva and Woolsey have addressed the right person with their comments – Nancy Pelosi. She holds the ability to take a vote on the middle-class tax cuts in her hands. The President and his staff have been uniquely unhelpful in this matter with their varying and conflicting statements on the issue, but at the root, Pelosi needs to have the votes to pass a middle-class tax cut alone, in order to get it done. Before the midterms, it was pretty clear she didn’t have the votes. Republicans can use a motion to recommit to add the tax cuts on the high-income earners into any vote, and my guess would be they would get anywhere from 60-70 Democrats joining them.
You can appeal to the President all you want to talk tough on this issue, and certainly he could be doing a better job than at present. And I agree with James Kwak that the President could clear all this up by saying “I don’t care what bill you send me, I won’t sign it.” But that’s not in the offing. The President wants those middle class tax cuts, no matter how ineffective they have the potential to be, while blowing a hole in the long-term budget picture. It’s a tough call for me, but I ultimately come down on extending the middle-class tax cuts for a limited period in the near term to make up for the lack of wage growth.
Still and all, the problem is in the House, and with substantial numbers of the House Democratic rank-and-file, who really believe in tax cuts as a solution to our economic problems. They’re completely wrong about that, but they certainly believe it and will vote their convictions, even though the stance isn’t popular. You’ll notice that the only Democrats making bargains, like using the money for the high-end tax cuts on a business tax cut, or increasing the brackets to $500,000 or $1 million a year, are Senators. The House does not appear to have the votes, and the Republicans have a mechanism to show that.
All that being said, I support the Progressive Caucus action. We deserve to see precisely which ConservaDems think that maintaining the tax rates from the last 10 years, a time of the worst wage and employment growth in postwar history, represents good economic sense. At least the leadership would then be seen as putting up a fight. I agree that you can sometimes win by losing by standing on principle and using that as the basis to make your case.
But that doesn’t seem to be the plan, unless Pelosi pulls a rabbit out of her hat.