McConnell's moves box in House GOP

Senate Republican Leader Mitch McConnell’s (Ky.) decision to let Senate Democrats pass legislation over the summer raising taxes on wealthy families has put his colleagues in the House in a tougher spot. 

McConnell decided against a filibuster on the July vote to extend tax rates only on incomes below $250,000 a year, a move that allowed Senate Democrats to approve the measure in a majority-only vote. The bill also increased the capital gains rate from 15 percent to 20 percent on incomes above $250,000 and extended child and college-tuition tax credits.

President Obama is now calling on House Republicans to approve the Senate bill, accusing them of holding up tax relief on the middle class to protect lower rates for the wealthy. 

“It certainly heightened the pressure on the House,” said Rep. Steven LaTourette, a Republican from Ohio. “We’re in a political box.” 

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McConnell’s strategy was reminiscent of the one he employed at the end of last year, when he let the Senate pass a short-term extension of the payroll tax holiday — even though many conservative experts thought it bad policy. The Senate GOP washed its hands of an unpopular fight with Obama that House Republicans insisted on waging and eventually lost.

McConnell’s decision made sense for his conference. 

It kept Senate Republicans safely out of a harsh spotlight while they were running to capture the majority and has kept the political heat off them in the lame-duck session.

The 51-48 vote also put the spotlight on vulnerable Democrats like Sens. Claire McCaskill (Mo.) and Jon Tester (Mont.), who voted for a bill that could be described by their challengers as a tax hike. While McCaskill and Tester ended up winning reelection, the votes provide political ammunition for the GOP. 

Don Stewart, McConnell’s spokesman, offers another argument for why his boss’s decision was savvy. He said it exposed divisions in the Democratic caucus over taxes — including the estate tax. 

Democrats left an extension of a lower estate tax prized by some Democrats out of the July bill. Democrats are now divided over how to handle the estate tax, with leaders pushing to raise the estate tax to 45 percent and Senate Finance Committee Chairman Max Baucus (D-Mont.) and other centrists pushing for a much lower rate. 

“All it did was show the president’s inability to pass what he’s asking for in a Democrat Senate, much less a Republican Congress,” Stewart said. 

Stewart also argues the vote signals that Senate Democrats won’t be able to rally around Obama’s proposal last week to raise $1.6 trillion in higher taxes to avoid scheduled tax hikes and spending cuts at the end of the year that economists say could trigger a recession. A House Republican counteroffer on Friday included $800 billion in new tax revenues and did not raise any tax rates. 

“It highlights the divisions among Democrats. It shows they can’t do what it is and it shows how unserious this president’s plan is,” said Stewart. “So I’d say it was pretty smart.”

McConnell’s post-passage narrative is lost on some House Republicans, however, who think the Senate GOP leader’s decision to let the Democratic tax proposal slide through has made their lives more difficult.

“This is one of those examples of something that has come back to bite us and hurt Republican efforts to negotiate past the fiscal cliff,” said a GOP aide. 

Still, House Republicans like LaTourette say their conference shouldn’t do something “stupid, policy-wise” to get out of the political box.  

Republicans have a weak hand, LaTourette said, but he does not think they should retreat and pass something along the lines of the Senate Democratic bill, which ends Bush-era rates for family incomes over $250,000.

Rep. Randy Neugebauer (R-Texas) said letting the Senate Democratic tax plan pass this summer “seems to shift the debate where everyone just wants to be talking about taxes.”

“What we really need to be talking about is cutting spending and entitlement reform, things that really make a substantial dent in the deficit,” he said.

“On the face of it, it looks like we’re being the victims of our own decency,” Rep. Trent Franks (R-Ariz.) said of the ramifications for letting the Senate bill pass.

Obama has used the Senate-passed bill often in the last few weeks to bash House Republicans.

“The Senate has already passed a bill to keep income taxes from going up on middle-class families,” Obama said during his Saturday address, echoing what he said in his post-election press conference. “If we can just get a few House Republicans on board, I’ll sign this bill as soon as Congress sends it my way.” 

McConnell has tried to shift the focus back to entitlement reform. Since Election Day, he has repeatedly urged Obama to work with Republicans to overhaul safety-net programs, and outlined changes to Medicare and Social Security in a Friday interview with The Wall Street Journal. Specifically, he has called for increasing the Medicare eligibility age and curbing cost-of-living adjustments for Social Security.

In July, senior Senate Republican staffers argued that the Senate Democrats’ tax bill had no chance of becoming law because revenue-raising provisions must originate in the House. But Democrats say that is a tenuous claim. 

A senior Senate Democratic aide said Speaker John Boehner (R-Ohio) could easily restructure the Senate Democratic bill into a House resolution.

“If any Republicans think they can block an extension of middle-class tax cuts on a technicality, that’s a loser argument,” the source said. 

Whatever the tactical considerations in July, House Republicans now see the fiscal-cliff standoff as between them and Obama, with the Senate as a bystander.

“The issue is not between the Senate and White House, the issue is between the White House and the House,” said Rep. James Lankford (R-Okla.).