As the election season barrels towards the end—we’re only twenty-eight days away—key players in Washington are already maneuvering to deal with the so-called “fiscal cliff” that awaits on the other side of November 6. Tuesday, Senator Chuck Schumer delivered one of the most crucial speeches to date.
There’s an important caveat at the end, but most of the speech ought to make progressives awful happy, as Schumer is boldly trying to pull Democrats away from flirtation with dangerously regressive tax policy.
Here’s why: the dirty little secret of President Obama’s re-election is that, despite campaigning extensively on a pledge to end the Bush tax cuts for wealthy Americans, it has seemed fairly likely that Obama would be inclined to sign a fiscal cliff deal, or a deficit reduction deal later in his term, that did the exact opposite—one that lowered rates across the board.
Recall that during the debt ceiling negotiations, according to all available reporting, Obama was prepared to accept a tax code overhaul that would lower all income tax rates in exchange for $800 billion in new tax revenue gained by closing loopholes and exemptions. This is basically what the Simpson-Bowles plan does: it calls for the top income rate to be no higher than 29 percent (and as low as 23 percent), offset by raising the capital gains tax and closing exemptions and loopholes.
And although his campaign contains many paeans to tax fairness, at the same time Obama has also said that he is “eager to reach an agreement based on the principles of my bipartisan debt commission.” (That’s a quote from his acceptance speech in Charlotte—not exactly an insignificant address). Meanwhile, key Democrats in Congress—Senator Dick Durbin and Representative Chris Van Hollen—have explicitly called Bowles-Simpson a “template” for a debt deal in recent weeks.