Breaking Republicans’ anti-tax absolutism is key to understanding just about everything Democrats have been doing for months now, both in Washington and on the campaign trail. It’s the strategic underpinning of the Buffett Rule and the surtax on million-dollar earners; it’s the purpose of the so-called “sequester” — the deep cuts to defense and discretionary spending that will kick in next year if Congress doesn’t pass a substantial deficit-reduction plan — in the debt-limit deal, and it explains Democrats’ reluctance to unwind the sequester until Republicans agree to significant new revenues.
So far it hasn’t worked, and most elected officials don’t expect any movement on the issue until after the election.
Even if President Obama wins re-election, though, what’s to stop Republicans on Capitol Hill from linking arms and blocking any tax revenues?
At a Christian Science Monitor breakfast roundtable with reporters on Tuesday, Rep. Chris Van Hollen (D-MD), the Dems’ top budget guy, explained the strategy: If Republicans don’t budge, they’ll be responsible for a much bigger tax increase when all the Bush tax cuts expire.
“By law all those tax cuts expire,” Van Hollen said. “That’s about $5 trillion over 10 years. So then the question is, ‘OK it takes an act of Congress to extend them all.’ And there then is an opportunity for a negotiation where revenues are part of a deficit reduction plan. I would hope our Republican colleagues would agree that $2 trillion in revenue is better than $5 trillion from their perspective. So that at least creates a forcing mechanism for what could be a positive outcome.”
The strategy is particularly viable if President Obama wins in November. Even if Republicans decide they’d rather let all the Bush tax cuts expire than vote to increase revenues, Obama could introduce a new round of “Obama tax cuts,” in the first days of his second term, and press a new Congress to pass it.
If Republicans take control of the Senate, and particularly if Mitt Romney wins the presidency, the plan begins to break down.
A Republican Congress could pass legislation to reinstate the full Bush tax cuts and force a showdown with Obama. And of course, President Romney wouldn’t have a problem signing such a bill. But if Obama wins and Dems keep the Senate, the leverage works.
Regardless, it’s quite possible that Congress will pass a brief extension on all of these deadlines, to buy the new Congress a few weeks or months.
“Could you structure an agreement where you had a relatively short time frame to try and negotiate a lot of these big issues without releasing the pressure?” Van Hollen said. “You could. I can imagine a number of scenarios where you could do that.”
