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The Left Needs to Pressure Democrats on Taxmageddon | The Nation

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George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

The Left Needs to Pressure Democrats on Taxmageddon

This morning, House Speaker John Boehner’s spokesman blasted out an e-mail titled “ ‘A Suicidal Tetrahedron’? ‘The Dodecahedron of Mutually-Assured Destruction’?”

It wasn’t a tribute to an obscure work of the late Ray Bradbury but rather a fairly accurate description of the Democratic Party’s scrambled position on another darkly named event: Taxmageddon, the year-end expiration of the Bush tax cuts.

“Folks—The conflict among Washington Democrats over stopping the largest tax hike in history is now far too complicated to be described by the usual ‘circular firing squad’ cliché,” wrote the spokesman, Michael Steel. He noted that President Obama, Nancy Pelosi and Chuck Schumer, Kent Conrad (the Senate Budget Committee chair), Bill Clinton and Larry Summers all have varying proposals for dealing with the expiration of the Bush tax cuts.

Steel is being a bit disingenuous when he invokes Clinton and Summers, since for one thing they have no actual say on policy, but more importantly, didn’t really break from anyone. All Clinton said was that he felt the post-election lame-duck Congress would probably have to briefly extend the tax cuts while the parties worked out a deal; he wasn’t, as Republicans tried to claim, saying the Bush tax cuts should be permanently extended.

But that doesn’t mean the Democratic Party actually has a coherent stance on tax policy—and it should really come up with one quickly, since the Republican policy is well known and easy to understand: tax cuts for everyone.

For Democrats, Obama stakes out the left side of the party debate: the White House reiterated this week it will not extend the Bush tax cuts for earners over $250,000, even temporarily.

Pelosi and Schumer, meanwhile, are pushing for the expiration of tax cuts for those earning over $1 million, because they think it will be a simpler public relations task. “The 250 [cutoff] never made it.… If we can get the $1 million people, and above, to pay their fair share, we get a lot of money,” Pelosi said last week. “If that’s easier for the public to understand, then we should go that route.”

Conrad, the powerful chair of the Senate Budget Committee, said last week that it “might make some sense” to extend all of the Bush tax cuts temporarily while the parties hammer out a solution—the same thing Clinton said. Conrad didn’t state a preferred outcome, though he did suggest Congress would “fundamentally reform the current corporate and individual tax system.”

This strikes me as a looming disaster and massive strategic miscalculation. How can Democrats not have a coherent battle plan for the biggest legislative face-off in recent memory?

Should Democrats prevail in November, how will they enforce a mandate on tax reform if different parts of the party were calling for substantially different things?

The party needs a coherent message on taxes, and should probably embrace one that isn’t so reactive. All current plans propose the extension of some Bush tax cuts and the retirement of others. But as several people have already pointed out, the smart move here would be saying to hell with the Bush tax cuts, and advancing a new Obama tax package—a program of progressive tax restructuring that substantially reduces the deficit while making the tax code more equitable.

The party can pair this with a plan to defuse the other ticking time bombs set to detonate on New Year’s Eve: the deep cuts forced by the budget sequesters mandated by the debt ceiling deal, and the expiration of the payroll tax and extended unemployment benefits.

If Democrats run on a coherent plan for Taxmageddon and win, they have a good chance of implementing it. If Obama keeps the White House, holds the Senate, and wins back the House, he can enact a tax policy pretty freely—a tax package would be exempt from the filibuster in the Senate under reconciliation.

But if the party is divided, history shows that Republicans will exploit those divisions to skew the outcome in its direction. A scrambled Democratic Party is even more dangerous if the election has a mixed outcome: say, Obama in the White House, but Republicans keep the House of Representatives. There will have to be serious negotiations, and Democrats won’t be able to present a unified front.

Elected members of the Democratic Party aren’t the only ones who need to get this together, either. There’s been precious little outside pressure from progressives to get Democrats to form a coherent Taxmageddon policy. Progressives should either present a plan and demand Democrats get behind it, or at least press for some clarity about the party’s ideas while drawing red lines around unacceptable concessions.

Absent that pressure, progressives could expend a tremendous amount of energy to re-elect Democrats in November, only to see them turn around the very next month and entrench a terrible tax policy that is only mildly less regressive than the Bush tax cuts.

There’s real danger here. Sure, election year Obama wants to raise taxes on people earning over $250,000. But recall that last summer Obama was apparently willing to extend all of the Bush tax cuts and even lower some top rates in exchange for $800 billion in revenue from “closing loopholes”—a nebulous, and perhaps impossible, goal.

Katrina vanden Heuvel and Robert Borosage made a persuasive argument in this week’s issue for a sustained inside/outside game from progressives to “expand the limits of the current debate.” If Taxmageddon isn’t a good place to start, I’m not sure what is.

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