Boehner, Cantor take a firm stand for the wealthy's tax breaks
Last week, the Senate made its statement on taxes: the majority supports a plan that would extend tax breaks for all income up to $250,000, while returning to Clinton-era rates on higher income. A Republican alternative -- extending all tax breaks without any budget offsets -- was defeated.
Yesterday, the House offered its response, approving the Senate GOP plan that was already defeated.
The House votes pitted a straight extension of all the expiring Bush tax cuts against a Democratic plan, passed by the Senate, that would allow taxes on income, capital gains and dividends to rise on earnings over $250,000, increasing revenues by around $100 billion. It was not close. The Democratic plan failed 170-257, with 19 Democrats voting no. The Republican plan passed 256-171, again with 19 Democrats throwing in their support. One Republican, Representative Timothy V. Johnson of Illinois, who is retiring, opposed it. [...]
The House vote Wednesday and Senate passage of the Democratic plan give the parties some political cover during an August recess when each will blame the other for an economic crisis expected in January when more than $500 billion in tax cuts are set to lapse.
The result was not unexpected, but the competing House and Senate votes keeps policymakers on track for an interesting showdown.
For his part, President Obama has already issued a veto threat, vowing not to sign the Republican plan, and the White House issued a statement after the House vote: "At a time when we need to make tough choices to reduce the deficit, we can't afford another massive tax break for the wealthiest two percent of Americans. We've tried this approach, and it didn't grow the economy or strengthen the middle class.... [The president] will continue to call on Republicans in the House to stop holding the middle class tax cuts hostage and the House needs to follow the Senate's lead and get this done."
The references to holding tax cuts "hostage" is of particular interest, because it helps summarize exactly what Republican lawmakers are arguing: additional tax breaks for the wealthy or tax breaks for no one. That's the message the GOP is taking into the August recess and the 2012 election season.
Efforts to strike some sort of agreement -- if one is even possible -- probably won't begin in earnest until the fall, but it's worth noting that the unyielding Republican position faces considerable opposition. The White House, the Senate, and a clear majority of Americans back the Democratic approach, not the GOP plan, which gives Dems some additional leverage.
Indeed, one of the striking aspects of this debate thus far is just how many Democrats are standing firm on this. Republicans hoped the mere possibility of attack ads labeling Dems "tax raisers" would be enough to force Democrats to cower in fear, but that hasn't happened -- the vast majority of Dem lawmakers believe the American mainstream is on their side.
If the pattern holds, GOP leaders may soon realize their hostage strategy, premised on the assumption that Democrats will cave, may fail -- and it will be Republicans who are on the hook for higher tax rates on everyone in 2013.