Dems to go on offense on taxes

Greg Nash

Emboldened Senate Democratic leaders are planning to go on offense on raising taxes.

Democrats are planning to capitalize on the Republican Party’s poor handling of the recent fiscal showdown by parlaying it into another legislative victory.

Congressional Democrats want Republicans to sign off on $50 billion worth of tax increases to eliminate the sequester’s automatic spending cuts. The next phase of these cuts will take effect Jan. 15, when government funding will drop from $986 billion to $967 billion.

“There’s a lot of pressure on both sides, especially Republicans, after what they did to the country by following the Tea Party agenda, to show they are willing to come to the table and compromise,” said a Democratic aide.

Democrats say they would not accept any budget deal unless it includes tens of billions in new tax revenue. Their opening bid is $1 in new taxes for every $1 in spending cuts to offset the cost of ending sequestration for domestic and defense discretionary spending programs.

They add that Republicans will have added incentive to agree to tax increases because a disproportionate share of the sequester for 2014 will hit defense programs.

Budget experts estimate it would cost about $100 billion to turn off the sequester for fiscal 2014. Richard Kogan of the Center on Budget and Policy Priorities pins the number at $109.3 billion.  

Some Republicans, such as Sens. John McCainJohn McCainLots of (just) talk about 'draining the swamp' 56 memorable moments from a wild presidential race Is Georgia turning blue? MORE (Ariz.) and Lindsey GrahamLindsey GrahamGraham: GOP Senate could rein in Clinton White House The Hill's 12:30 Report 56 memorable moments from a wild presidential race MORE (S.C.), are focused on stopping automatic cuts to defense programs. Democrats say every dollar in averted defense cuts must be matched by protecting a dollar in nondefense domestic spending.

A GOP leadership aide said Democrats are deluding themselves if they think Senate Republican Leader Mitch McConnellMitch McConnellPelosi urges end to Defense Dept's 'clawback' of soldier overpayments Coffman’s stance on climate change disingenuous, irresponsible Bill Murray honored with Mark Twain Prize MORE (Ky.) or Speaker John BoehnerJohn BoehnerDems brace for immigration battle 56 memorable moments from a wild presidential race Trump may pose problem for Ryan in Speaker vote MORE (R-Ohio) would go along with any tax increases.

“Jobs are still slow to come back, ObamaCare is crushing small businesses, and the last thing to do is raise taxes,” said the aide. “Republicans will be very, very insistent that tax increases are not be part of this.”

But Democrats argue the political damage inflicted by the GOP could have unusual reverberations in the policy field.

A Wall Street Journal/NBC News poll from earlier this month showed public support for ObamaCare increased during the government shutdown, even as the rollout of the healthcare law was plagued by technical glitches.

A CNN/ORC International poll released Monday showed that 56 percent of Americans think the GOP is too extreme.

Democrats say Republicans would be more eager to compromise on taxes to erase the narrative that they have become beholden to their most doctrinaire factions of their party. But others maintain that there is no daylight between the Tea Party and GOP leaders on Capitol Hill on tax policy.

Another senior Democratic aide said Republican negotiators could meet the revenue requirement demanded by Senate Majority Leader Harry ReidHarry ReidReid: 'I have set the Senate' for nuclear option Obama in Nevada: 'Heck no' to Trump, Joe Heck Dems double down on Nevada Latino vote MORE (D-Nev.) and Budget Committee Chairwoman Patty MurrayPatty MurrayWhat the 'Bernie Sanders wing of the GOP' can teach Congress Senate Dems demand answers from Wells Fargo over treatment of military A fight for new rights MORE (D-Wash.) by raising various fees. 

“If there’s commitment on both sides to undo sequestration because of hits to defense, people’s definition of revenues can change. There are other ways to raise revenues that are not tax increases or loophole closures,” said the aide. “There are plenty of fees out there that you could call revenues.”

Transitioning from defense to offense presents new political problems for Reid, who attributed his negotiating strength in the recent fiscal standoff to the unity of the Democratic caucus.

While Democrats stood together against making concessions in exchange for keeping federal agencies open and debt obligations paid, they are more divided on the issue of taxes.

Four Democrats, including three facing tough reelection fights next year, voted against the Senate Democratic budget plan that will guide Murray’s opening bid in talks with House Budget Committee Chairman Paul RyanPaul RyanPelosi urges end to Defense Dept's 'clawback' of soldier overpayments Sanders raises .4 million on Ryan's budget panel warning Time for Clinton supporters to be tolerant and believe in 'stronger together' MORE (R-Wis.). They have been instructed by leaders to reach a deal by Dec. 13.

“The debt held by the public has increased 90 percent since President Obama took office because [Democratic Sens.] Kay HaganKay HaganPhoto finish predicted for Trump, Clinton in North Carolina Are Senate Republicans facing an election wipeout? Clinton's lead in NC elevates Senate race MORE [N.C.], Mary LandrieuMary LandrieuTrump’s implosion could cost GOP in Louisiana Senate race Louisiana needs Caroline Fayard as its new senator La. Senate contender books seven-figure ad buy MORE [La.], Mark PryorMark PryorCotton pitches anti-Democrat message to SC delegation Ex-Sen. Kay Hagan joins lobby firm Top Democrats are no advocates for DC statehood MORE [Ark.] and Mark BegichMark BegichTrump campaign left out of Alaska voter guide Ryan's victory trumps justice reform opponents There is great responsibility being in the minority MORE [Alaska] have spent like drunken sailors and now want to raise taxes to spend even more, hurting the middle class,” said National Republican Senatorial Committee (NRSC) spokesman Brad Dayspring.

Of that group, only Landrieu voted for the Democratic budget in March. That blueprint, which has been lambasted by the GOP, would raise nearly $1 trillion in new revenue through eliminating some tax breaks for the wealthy.

Democrats say the government shutdown will be a bigger issue than tax hikes in the next year’s election.

“2014 is shaping up to be a referendum on the badly damaged Republican brand that’s gotten worse in recent months after nearly every Republican Senate candidate supported a reckless and irresponsible shutdown championed by NRSC Vice Chair Ted CruzTed CruzJuan Williams: When WikiLeaks leaked my cell number 56 memorable moments from a wild presidential race Is Georgia turning blue? MORE [R-Texas],” said Justin Barasky, spokesman for the Democratic Senatorial Campaign Committee.

Democrats are seeking to take advantage of their political momentum in other areas.

Sen. Charles SchumerCharles SchumerReid: 'I have set the Senate' for nuclear option Immigration was barely covered in the debates GOP leaders advise members to proceed with caution on Trump MORE (N.Y.), the third-ranking Senate Democratic leader, will propose legislation that would reduce Congress’s authority over raising the debt limit.

It would give the president authority to raise the debt limit and merely allow Congress to vote on a resolution of disapproval to block action. The disapproval resolution would be subject to a veto, meaning Congress would need to muster two-thirds support in both chambers to stop future debt-limit increases. Schumer has dubbed it the “McConnell rule,” noting the minority leader offered such a plan a couple years ago.