We now know where Harry Reid stands in the great divide between base-broadening, rate-lowering “tax reform” and the Chuck Schumer approach, which rejects lowering rates as a trap. As I fully expected, Reid sided with Schumer.
“He’s supportive of the Schumer approach, thinks it’s smart to put the goalposts where Schumer set them,” said a Senate Dem leadership aide, who confirmed that Reid questions a framework — like Simpson-Bowles — which cedes tax rate cuts for top earners at the outset.
Obviously, this is critical for the lame duck session and a hypothetical grand bargain, as Reid will be in the room on any deal. And he agrees with Schumer that allowing rates to go down, Bowles-Simpson style, based on a theory that the base would stay broad enough to increase revenue, just invites trouble.
What I did not expect is that the Obama Administration, supportive of the typical “tax reform” approach, would also side with Schumer – sort of.
Q: And one other subject — the fiscal cliff. Senator Schumer started some controversy yesterday when he said that cutting tax rates for top earners should not be part of any future negotiations about — over all the tax code. And the President has, in the past, been open to cutting tax rates on the highest earners as part of tax reform. So I wonder, does Schumer’s comments in any way reflect a hardening of the Democrats’ stance on this? Does the President still support the idea of cutting taxes — tax rates on top earners in a tax reform?
MR. CARNEY: Well, the President has made clear that he supports tax reform broadly, but what Senator Schumer is making is a very important point — that the wealthiest must pay their fair share in any balanced approach to reducing our deficit in a way that protects the middle class, seniors, and our ability to invest in education and innovation.
He’s making the very clear point that the President has made and others have made, that it is fanciful thinking to imagine that you can give more tax cuts to millionaires and billionaires and that the pixie dust of trickle-down economics will somehow erase any damage to the deficit or hold harmless the middle class. It is a mirage. It’s not realistic.
If it’s a mirage, it’s a mirage that the White House has had no problem inventing as it relates to the corporate tax rate, which they want to lower in exchange for loophole closures. But this harder line on so-called “tax reform” is very welcome, and Schumer appears to have not stepped out on his own.
Dick Durbin must be feeling lonely right about now.