Chuck Schumer definitely got under the skin of Republicans yesterday by suggesting that Democrats were being led into a “tax reform” trap. Until this point, Republicans had been fairly cagey about their tax plans for a grand bargain, but they were able to garner a mild consensus over the concept of broadening the tax base while lowering the rates. Far too many Democrats joined them in this theoretical agreement. And Schumer basically called it a con job. You know he was on the right track, given the responses at the upper echelon of the Republican leadership.
Mitch McConnell shrieked out this response to the Schumer speech:
“Sen. Schumer is now the second member of the Senate Democrat leadership to endorse ‘Thelma and Louise economics.’ Senior Democrats are now openly acknowledging their plan to hold the economy hostage to massive, job-killing tax hikes, and espousing the fiscally irresponsible view that says the country should be driven off the fiscal cliff rather than Congress working toward bipartisan solutions to reform and strengthen entitlements without killing jobs. And he admits that Democrats don’t intend to reform entitlements or our tax code as a means to restore fiscal sanity, create jobs, or protect our seniors, but rather to use the effort as a lure to entice support for even more job-killing tax hikes. The Speaker and I have called for extending all the income tax rates for a year, ensuring that no one sees an income tax hike in January and preventing the economic harm and massive job loss that will come if Sen. Schumer and Washington Democrats follow through on their threats to drive us off the fiscal cliff. This uncertainty needs to be dealt with sooner rather than later. We need to find a way to deal with the sequester not by cutting a penny less, but by intelligently making the decisions that are necessary to keep our promise to reduce the debt by $2.1 trillion and to get our economy back on track.”
There’s certainly no indication of a favorable response to Schumer’s offer on social insurance “reforms,” which was part of the speech. Republicans simply value the tax cuts more than pretty much everything else. And McConnell correctly sees Schumer’s speech as a prelude to the Democrats refusing to play the game of “tax reform” on Republican terms. And note that McConnell really wants to call that fiscal cliff a cliff, rather than what it is, to heighten the urgency.
Kevin Smith, spokesman for House Speaker John Boehner, was more specific in his criticisms of Schumer: “A tax reform framework that lowers rates and closes loopholes has support from both parties, including the Obama Administration, and it offers the best hope for bipartisan efforts to create robust economic growth and reduce our deficit… Sen. Schumer seems to be off on an island with these remarks.” That’s certainly what Boehner would hope, anyway. Because Republicans won’t accept a tax resolution that increases rates. Certainly their base won’t accept it. Which means that Schumer’s speech really was a poison pill, and everyone knows it.
Of all the ideas that were begging to be derailed, the grand bargain is it. The Republicans knew that their plan was predicated on Democrats being gullible enough to agree with it. That day has passed, hopefully, thanks to Sen. Schumer.