Searching for a Compromise on Tax Cuts for the Top Bracket
What it might be, and why
After the election bloodbath, Dems are reportedly weighing a "compromise" over the extension of the Bush tax cuts, particularly for the top bracket making over $250,000. As The Huffington Post's Sam Stein reported, it looks like Obama may consider "extending the upper-end Bush tax cuts for one or two years." But Jed Lewison at The Daily Kos notes that press secretary Robert Gibbs seemed to hint at a presidential veto should Republicans aim to extent the upper-end tax cuts permanently. The middle ground, as Politico's Mike Allen reports, might be simply raising the line so the upper bracket starts at $500,000 or $1 million. Political observers, particularly on the left, are watching carefully to see where the president gives ground and what the effect might be.
- Well, Extending Is Hardly a 'Compromise' "There is a way a one-year or two-year temporary extension could represent a compromise of sorts," explains The Washington Post's Greg Sargent: "If Republicans signal a willingness to at least entertain the idea of letting the high end cuts expire after that temporary extension. But many of them aren't doing that." Thus, he suggests we call the idea of temporarily extending all the cuts, including the "ones for the rich," what it is: "capitulation."
- Why Democrats Want to 'Decouple' the Two Tax Cuts The tax cut the Democrats favor is the one for people making under $250,000. The one they don't is for those making over $250,000. Mike Allen reports the plan is to "try to 'decouple' the middle- and upper-class extensions," making the first permanent and considering a temporary extension for the second. Jed Lewison neatly encapsulates the liberal view of the matter:
How this ultimately plays out is going to be very revealing: will Republicans in the House insist on holding the first tax cut hostage in order to get a second "bonus" tax cut for wealthy people (remember, everybody gets the first tax cut, Republicans just want wealthy people to get a bigger tax cut than anybody else), or will they decide to compromise with President Obama and get something done?
- Pros and Cons of the Strategy "Anything that forces Republicans to eat crow by showing their slavish devotion to rich people is a good thing," muses liberal blogger Jamelle Bouie, at The American Prospect. But Bouie isn't delighted with the idea of raising the dividing lines between "classes" to perhaps even $1 million to do that. "Of course," admits Bouie, "given the choice between tax cuts for some of the nation's rich people and tax cuts for all of them, I'll take the former without question. Still, let's not delude ourselves into thinking a half-million dollar income isn't rich."
- Why, Politically, It's Better to Cave Obama doesn't want for both tax cuts to expire, "allowing Republicans to claim falsely that Obama actually raised taxes," explains Adam Serwer. Ideally, by decoupling the two, "Republicans could be portrayed as holding middle-class tax cuts hostage to tax cuts for the rich. ... But," he continues, "given the Democrats' anemic messaging and the poor economy I'd be surprised if it worked out that way." The point is that "anything the president passes with Republican help will make him more popular," and, given that the president already "signed a giant tax cut that no one remembers," it might make sense to attach his name to a cut Republicans really "will never let anyone forget." His conclusion:
Even if Obama "capitulates" on the tax cuts, then, he wins. The middle class doesn't win. The economy won't be strengthened. But Obama wins, which, from his perspective, makes it worth "losing" this fight.