There’s been a lot of chatter about Sen. Patty Murray’s big speech in which she claimed that Democrats hold the leverage in the coming “fiscal cliff” talks over the Bush tax cuts and that they should be prepared to let all the tax cuts expire if necessary to force the GOP’s hand.
The idea is that if all the cuts expire, Democrats can come back and renew just the middle-class cuts, and dare Republicans to vote against it.
“If the Bush tax cuts expire,” Murray said at the Brookings Institution on Monday, and taxes go up for everyone, the debate will be reset. Every proposal will be a tax-cut proposal, and Republicans will no longer be constrained by their no-new-taxes pledge.
“If middle-class families start seeing more money coming out of their paychecks next year, are Republicans really going to stand up and fight for new tax cuts for the rich?,” Murray asked. “Are they going to continue opposing the Democrats’ middle-class tax cut once the slate has been wiped clean? I think they know this would be an untenable political position.”
The Obama/Democratic proposal would cut taxes on all income up to $250,000, even that enjoyed by the “job creators” and “small-businesspeople” who make more than that. Republicans won’t support this proposal, because so doing would deprive them of leverage over tax rates only on income above that level, which is earned by 2 percent of taxpayers.
It won’t be lost on Democratic incumbents and candidates that Murray is chair of the Democratic Senatorial Campaign Committee — and that she’s signaling that she thinks this battle makes for good politics in down-ticket races. The idea here is to separate the debate over the middle-class tax cuts from the debate over the high-end ones; if the latter debate can be isolated, it’s a tougher position for Republicans.
Democrats failed to accomplish this in 2010. They threatened to hold a vote just on extending the middle-class cuts but ultimately punted until after the elections. It remains to be seen whether Democrats will hold the line this time, but there are signs that they are convinced they hold the upper hand.
The Senate is expected to vote later this month on this proposal. Right now, we’re talking only about a continuation of the low rates. If the Bush tax cuts expire and Murray’s scenario comes to pass — a big if, given previous Democratic behavior — Republicans would be forced into the position of voting against an outright reduction of tax rates on all that income simply because they also want a reduction of the rate on income above that. If that doesn’t clarify the debate, it’s unclear what will.