Dems to go on offense on taxes

Greg Nash

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

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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 McCain (Ariz.) and Lindsey Graham (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 McConnell (Ky.) or Speaker John Boehner (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 Reid (D-Nev.) and Budget Committee Chairwoman Patty Murray (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 Ryan (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 Hagan [N.C.], Mary Landrieu [La.], Mark Pryor [Ark.] and Mark Begich [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 Cruz [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 Schumer (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.