A tax cut deal looks all but certain now, so this is mostly just an intellectual exercise. But on the off chance that the deal gets derailed, and the Bush tax cut expire…what then?
Broadly speaking, there are two possible outcomes if that happens: the Dems win, or the Dems lose, and everyone decides the should’ve just caved in December. Both start at the same place: The tax cuts expire on January 1, touching off a huge spin war between the parties. Republicans call it the largest tax hike in history, point, perhaps, to sinking stock prices, hammer away relentlessly in a way that only Republicans know how to do. Democrats continue their current approach, argue that Republicans have held tax cuts hostage until millionaires get a bonus tax cut, point to this past weekend’s votes as proof, and so on.
Messaging will be a huge part of it. But bigger (and, of course, related) will be the maneuvering on Capitol Hill. I envision two basic tracks.
Track 1: On the day the cuts expire, President Obama introduces a shiny new package of “Obama tax cuts” for middle class Americans. He sends it to the Hill and demands Congress pass it immediately. He demands this over and over again, chastising “Congress” — and particularly the GOP — every day it doesn’t pass. Harry Reid puts it on the floor repeatedly. Republicans filibuster repeatedly, but eventually give in to public pressure. One could imagine something like this playing out if the shoe were on the other foot. But that’s fundamentally not how the Democratic party operates. So we’re left with…
Track 2: On the first day of the next Congress, John Boehner passes H.R. 1 — the Reverse Job Killing Tax Hikes Bill. It retroactively and temporarily extends all the cuts and passes with unanimous GOP support and the support of some Democrats. He sends it to the Senate, where Democrats initially balk. An aloof Barack Obama presses “Congress” — but not specifically the GOP — to reach an agreement. John Boehner replies “well, we in the House passed a tax cut bill with bipartisan support.” Ultimately the Democrats can’t keep it together to block that bill, and it passes, making Dems look weaker and less effectual than they would have looked if they’d just agreed to cut a deal in December.
Something like that anyhow.
For what it’s worth — and given the nature of the two parties — I think track 2 (or something like it) is just much more likely. I think the White House understands this, doesn’t have the stomach for track 1, and that’s why they’re so annoyed with Dem leaders on the Hill for pulling political stunts: They’re boxed in — or at least they think they are — and the quicker they can get out, the better it will be for them and the Democratic party.
