Diary

In Tax Cut Debate Democrats Put Self-Preservation Over Public Good

In case you hadn’t heard, Democrats are facing an uphill battle this November. But as Election Day looms they are scrounging for ways to make Republicans look bad and Democrats look good. It makes for great politics. It may even help their November chances. But great politics often leads to bad policy, and what’s good for Democratic candidates is often bad news for average Americans.

To see how politics is trumping principle look no further than the debate over whether to extend the Bush tax cuts. Agreement between the parties has been rare over the past year. Fortunately, the sagging economy has brought bipartisan agreement on one issue – avoiding tax hikes at all cost. The economic realities of today have led to a growing number of Democrats who have come out in support of tax cuts for all Americans. For instance, Gerry Connolly (D-VA) has said that “I think there is a certain logic to leaving well-enough alone for now, given the fragility of the economy.” He is far from alone. Given unanimous Republican support, there is a majority of the House who favors extending the Bush-era tax cuts for all Americans, at least in the short term.

Unfortunately for Americans, Nancy Pelosi wants nothing to do with it. She has discussed the possibility of using the suspension process, which supplants the usual majority vote for a two-third vote requirement, to vote for the tax cuts. Talking Points Memo explains her strategy,

If Pelosi offered one bill to only extend the middle class cuts, Republicans could use procedural maneuvers to force a separate vote on extending tax cuts for the rich — a vote Pelosi might well lose.

Likewise, if she brought two bills to the floor — one to extend the middle-income cuts and, one to extend the cuts for the wealthy — both might pass. That’s an outcome she wants to avoid.

Fortunately for her, there’s a way out. The House rules allow the Speaker to offer legislation under what’s known as suspension of the rules. Under suspension, time for debate is limited and no procedural hijinks are allowed — but a two-thirds majority of members on hand is required for passage.

The goal of such a maneuver is to force Republicans into a corner and make it appear as if they are against extending tax cuts for the middle class. But don’t let Democrats’ procedural tricks fool you – Republicans want to extend the tax cuts for everyone. During a recession, in which the top 2 percent of earners represent more than 33 percent of consumer spending, it doesn’t make economic sense to raise taxes on anyone. In the face of depressed wages and a lackluster hiring market we need to keep as much money as we can in the pockets of citizens. It is the government who must make the move to tighten their belt in response to declining revenues.

Sadly the economic realities of the recession haven’t put a dent in Democrats’ strategy. Right now, priority number one for Democrats is winning in November, even if that means Americans lose. And sadly, part and parcel of increasing their November chances is making Republicans look bad on tax cuts.

Even if Democrats do not attempt the procedural ploy there is mounting evidence that they will punt on the tax cut vote. As the Washington Post wrote today, “many vulnerable Democrats are uneasy about the economic impact, and political consequences, of letting anyone’s taxes go up right now.” This may be even more intellectually dishonest than Pelosi’s earlier plan. At least then they were showing their true colors, namely that the leadership supports raising taxes on the upper classes regardless of the economic impact. But punting the vote until after the midterm elections is another base political move, designed to avoid “tough” votes for their struggling members.

Once again, such a strategy could be disastrous for average Americans. First, citizens and investors need to know what the tax rates will be before making certain economic decisions. Economists and most notably CEO’s have been urging the Obama administration to provide some economic certainty. Sadly, Democrats agenda has done anything but. Between our growing budget deficit, enormous increases in regulations and red tape, and looming tax cuts, the amount of variables that an investor has to consider is dramatically impeding economic activity. Extending the tax cuts could provide at least some small measure of assurance to investors that they can begin to reenter the market.

Second, delaying the tax cut vote could lead to higher taxes for all Americans, not just the upper classes. As The Hill reported today, “If Democratic leaders fail to determine the tax rates by Dec. 10, it could be too late for payroll administrators to withhold the right amount of tax from workers’ paychecks, according to industry officials.” This only leaves about a two-week working window during which Washington can vote on the cuts before the IRS deadline for releasing withholding tax tables. In other words, unless Democrats set aside their egos and allow a bipartisan extension to pass soon, workers could be paying much more in taxes this April.

The politics of extending the tax cuts is trumping what is good for the country. As Joseph Lieberman has said about the Democratic stalemate, “[T]he politics ultimately triumphed. We didn’t get much of anything done. And that’s why I think, ultimately, members of the Senate have decided the best thing to do is go home, particularly those who are running.” That may be what is best for them. But is that is what is best for Americans?

by Brandon Greife, Political Director of the College Republican National Committee