Chuck Schumer expressed an “appetite” to fight for expiration of the Bush tax cuts for income above $250,000, even if it meant that all of them expire. That would be the way to get them, but it’s not likely to happen. The President is too far dug in on not letting taxes rise for “middle class working families,” and therefore got himself stuck. He doesn’t want those taxes to rise, period. Maybe the Democrats in Congress could defy that strategy by filibustering any temporary extension, but I doubt it highly. Mitch McConnell certainly doesn’t sound worried:
“I think it’s pretty clear now taxes are not going up on anybody in the middle of this recession,” McConnell said on Meet the Press. “It isn’t going to happen.” [...]
The White House is pressing the GOP to allow an extension of unemployment benefits and the tax breaks in the stimulus bill in exchange for an extension of income tax rates. According to the Huffington Post, Obama will allow the cuts to expire if the GOP refuses. On that score, McConnell claimed there’s no impasse.
“I think we will extend unemployment benefits,” he said.
So that was a signal. The reference is to this story from Sam Stein, where the President told Democratic leaders in a private meeting that he would oppose any deal that didn’t get unemployment benefits extended along with the tax cuts, along with some other expiring tax measures like the Making Work Pay tax cuts from the stimulus. “Without them, taxes would still rise for 95 percent of Americans,” said a White House official. McConnell today mentioned the unemployment benefits, but not Making Work Pay. According to Jake Tapper Republicans have balked at extending Making Work Pay, which is a flat $400 tax credit for every worker in America.
Here are some of the other measures the White House wants:
The Alternative Minimum Tax;
The American Opportunity Tax Credit (higher education tax credit);
The Earned Income Tax Credit;
Extenders for the Research & Experimentation tax credit;
Bonus depreciation (expensing) – this doesn’t expire but the White House thinks it’s good for the economy;
The HIRE Act – a tax credit for hiring people;
Build America Bonds, which changes the tax treatment for municipal and state financing, allowing them to raise money for projects; and
Energy tax credits (solar and wind energy tax credits are set to expire).
Overall, this package could end up being as much as $150 billion dollars. It’s a tax credit-based stimulus, but it basically extends current law in a lot of respects, the current law we have that is not driving a whole lot of job growth.
I get the sense that a lot of Democrats simply don’t want to give up this fight, and want to use the leverage that the calendar gives them. But it’s a bit late for that. They’re right that the $60 billion annually from letting those top-end tax cuts expire could fund all kinds of noble programs. I heard that on the campaign trail for the last 10 years. They’re right that 56 percent of all income growth went to the top 1% over the last 20 years, and so they’re the last people who deserve to maintain low tax rates. They’re right that the effective tax rate of the wealthiest 400 Americans last year was 16.5%. They’re right that the tax rates Republicans seek, which according to them will “boost the economy,” led to the worst job and economic growth performance of the postwar era. Mitch McConnell hilariously defended this on Meet the Press today by saying “Imagine how much worse it would have been if we’d had a higher tax rate.” Franken was great on this:
22.7 milion jobs and a giant surplus later, George W. Bush waltzes into office and says, ‘Hey, we’re running a surplus. The people deserve a tax cut.’ Now let’s recall what he said about his tax cut. He said, over and over again, and I quote, “by far the vast majority of the help goes to those at the bottom end of the economic ladder.” Wow. That sounds like the bottom got a vast majority of the tax cuts.
They didn’t. Actually, the bottom 60 percent of Americans got just 14.7 percent of the Bush tax cuts. And the top one percent got 29.5 percent of the tax cuts. Exactly double. Let me repeat that. The top 1 percent got double of what the bottom 60 percent did.
The results of this new policy? Massive deficits. Only one million new jobs over the eight years of his presidency. One million.
And now my friends in the minority want to go back to that discredited economic philosophy.
The Democratic argument is right. But the leader of the party already stopped making it. He’s busy bargaining. And so that’s the bargain we’ll get. It’s a major loss for the party, and I think a lot of politicians inside it understand that.