Democrats are aiming to push legislation extending Bush-era middle-class tax cuts ahead of midterm elections. But with Republicans and several Democrats advocating a similar extension for high-earners, too, prospects for passage before November balloting appear uncertain.
So Democrats already are planning to turn the issue into a campaign themeâby blaming Republicans if the legislation fails. The looming battle over taxes and spending is likely to be a dominant one in Washington, stretching into next year, as the government begins to address chronic budget deficits.
“The Senate will move first, and it will be a test to see whether Republicans filibuster” to block the bill in a bid to also win tax cuts for higher earners, said Rep. Chris Van Hollen of Maryland, head of the House Democrats’ re-election effort.
“If you can’t get it out of the Senate, then you take it to the election,” Mr. Van Hollen said in a recent interview. “You say to the American people that Republicans want to continue to hold middle-class tax relief hostage for an extension of tax breaks for [the well-to-do]. That will be the debate.”
A spokesman for Senate Majority Leader Harry Reid confirmed on Sunday that the Nevada Democrat “intends to take a bill [to extend middle-class tax cuts] to the floor in September.”
The Democrats’ emerging tactic is a risky one being necessitated by the difficulty of the policy choices and the party’s internal divisions on the issue.
Given the uncertainty of the Senate outcome, the strategy offers the GOP a chance to accuse Democrats of planning to raise taxes on most Americans, by allowing all the Bush tax cuts to lapse. The cuts, passed in 2001 and 2003, will expire on Jan. 1, 2011, unless Congress passes legislation to extend them.
“Washington Democrats are poised to allow the largest tax increase in American history to take effect next year,” Rep. Mike Pence of Indiana said Saturday in the GOP’s weekly address.
Democrats reject the idea. Taking to the talk shows Sunday, Treasury Secretary Timothy Geithner reiterated the Obama administration’s support for extending middle-class breaks for families making less than $250,000 annually, while allowing those for higher earners to lapse, as part of a bid to tackle deficits.
Already, Republicans have been warning that Democrats are ignoring a “ticking tax bomb.”
A GOP research group plans to release new poll results Monday showing voters in 12 swing states might punish Democratic incumbents for failing to take action on the expiring tax cuts ahead of the election. The poll by Resurgent Republic says 55% of voters in those states would be less likely to vote for Democratic congressional candidates if Congress doesn’t stop or delay next year’s scheduled tax increases before Election Day.
Even if the tax-cut bill manages to pass the Senate, it could expose Democrats to the charge that they are raising taxes on higher earners in the midst of a weak economy, and hurting small-business owners.
“We are eager to oblige our friends on the other side of the aisle who want to have this debate,” Sen. Orrin Hatch (R., Utah) said in a statement Sunday. “This is about stopping a job-killing tax hike on small businesses during tough economic times.”
About 2% of U.S. households earn more than $250,000 annually, according to recent statistics. Still, the Senate-first strategy feeds into one of the Democrats’ broader themesâthat Republicans are clinging to policies of former President George W. Bush.
The strategy also could mute Republican criticism that Democrats are doing nothing to address the tax cuts’ expiration. And by having the Senate move first, it might allow vulnerable House Democrats to avoid politically risky votes to raise taxes on higher earners, or add to future budget deficits.
Members of the tax-writing Senate Finance Committee held a series of closed-door meetings last week to begin negotiating the outlines of an extension bill. But already, four senators whom Democrats normally would count on have said they have concerns about letting the upper-income breaks lapse while the economy is weak.
If the Senate ultimately is unable to muster the votes to pass a tax bill, some knowledgeable Democrats predict the House still might try a short-term middle-class extension bill ahead of the election.