Wednesday, June 13, 2012

Jeff Merkley: Let The Bush Tax Cuts Expire

Senator Merkley's plan is to maintain a hard line against Republicans during negotiations about extending the Bush tax cuts.  The Democratic position is that the tax cuts for very rich people should end, but tax cuts for the middle class should continue.  Republicans want to continue all the tax cuts.  As you and I and Yglesias know, Republicans are unlikely to offer a good compromise deal.  So if we hold fast as Merkley says, rather than cutting a mediocre deal as some Democrats seem to want to do, nothing will pass and all the tax cuts will automatically expire.  And that is good, because 2013 seems to go better in every possible scenario where the tax cuts expire.

1. If Democrats win big in 2012, they can do things however they like in 2013.

2. If the Republicans totally take over, they're going to do whatever they want anyway, and Democrats might still get a better deal because Republicans will be starting from a higher baseline of revenue if the tax cuts expire.  If they're satisfied with bringing the tax cuts back, we'll be spared further horrors than if they've already got most of those tax cuts and they want more.

3. In the fairly likely scenario that we have divided government, Democrats will be able to get a better deal from Republicans at that point, because what seems like a tax increase on the wealthy (if the status quo is that there are Bush tax cuts) is a tax cut for the middle class (once the Bush tax cuts expire).  Republicans then can vote for the Democratic position without violating the Contract With Grover Norquist, since that contract says (in backwards Latin, I think) that they can't vote for tax increases.

4.  Or maybe divided government will lead to gridlock and dysfunction and no deal, in which case I'll be happy that there's more federal revenue out there to fund useful programs.  Anyway, if you can't get a good deal in 2013, I can't see how you'd get a good deal in 2012.

The alternative, again, is to compromise with Republicans this year.  But there's no reason to do that when things are about to change in a way that gives Democrats an advantage in negotiations.  Merkley puts it in his soft-spoken way:
“I’m encouraging my team to realize we have lots of leverage on this,” he explained. “This is not a situation where you go to the table and you’re desperate to get a deal... The moment that January 1 comes, there’s kind of a hall pass granted to Republican legislators because now more modest changes than the Bush cuts are ones that are still tax breaks to the status quo. So that also gives some room for them to honor their pledge, if you will, and still work towards a reasonable ground on this.”
I like this guy and I'm proud that I give him money.


Ron E. said...

Also by letting the Bush tax cuts expire first, you get to replace them with what will come to be known as the Obama tax cuts (assuming he is re-elected). It can't but help the President and his party for voters to associate them with tax cuts rather than former President Bush.

Greg Hao said...

the problem here though is that i'm sure many people want to campaign on a compromised deal to extend the tax cut in the fall.

it would be difficult to campaign and get through to your regular run of the mill low information vote about the intricacies of the plan. actually, scratch that, they don't even want to know. they just want that above the fold headline: tax cut compromise reached.

this isn't to say i disagree with merkel and your position, i think this is the best approach as well. just difficult to see how it gets sold in the right way.

Neil Sinhababu said...

Thanks, Ron, I agree with that.

Greg, the Democratic message here is pretty simple: "We want tax cuts for the middle class, not the rich." I think that's a winning message on this issue, and I don't think the Republicans have anything so good to offer. So as far as branding our party is concerned, I think Democrats are better off accentuating the differences here.

John Rose said...

Ron, I think you're underestimating the memory span of the average voter. If taxes go up, then eventually go back down, that will make people angry, not grateful.