By Bernie Becker - 07/24/12 09:00 AM EDT
Democrats and Republicans in both chambers jockeyed for position Monday ahead of a series of votes expected over the next two weeks on extending George W. Bush-era tax rates.
The first battle is set for the Senate, where Democrats think they’ll be able to highlight their party’s support among the middle class by pushing for a vote to extend tax rates for one year on family income up to $250,000 annually.
Both sides think they are primed for an election-year messaging victory.
The Democratic Congressional Campaign Committee (DCCC) said Monday that the “devastating contrast” would help their party.
“This vote will be all the evidence you need to make the case to voters that the Republicans’ priorities of handing out more tax breaks to millionaires and billionaires — at the expense of protecting the middle class, education and Medicare — is out of touch,” Rep. Steve Israel (D-N.Y.), the campaign committee’s chairman, told candidates in a Monday memo obtained by The Hill.
But Republicans have countered that the Democrats’ plan amounts to a tax increase for close to a million small-business owners, something they say would drag down an already stagnant economy.
House Majority Whip Kevin McCarthy (R-Calif.) cast his party as trying to prevent a tax increase for all households and cast the Senate as engaging in political theater.
“I don’t see a tax hike looming before you, where it hits every single American, as a show vote, to try to stop it,” McCarthy, the No. 3 Republican in the House, told reporters. “What I hear from the Senate, they want to take everyone off a cliff — that’s a show, that’s a political show.”
The back and forth comes as the Senate is poised to vote on a Democratic plan that would also allow the top rate on capital gains and dividends to rise to 20 percent, and extend some targeted tax provisions that were expanded in the 2009 stimulus package.
On Monday, Majority Leader Harry Reid (D-Nev.) set up a likely Wednesday procedural vote on the plan, which needs 60 votes to clear that initial hurdle.
Neither the Democratic nor the Republican proposal is expected to make it out of Congress before November’s election.
With that in mind, both parties are using the tax votes to sell themselves to voters in what is expected to be a bruising campaign for both the White House and control of Congress.
Taxes have historically been seen as a GOP domain, with Democrats often having struggled to find an effective message in that arena.
But Democrats now believe that they have the upper hand on the issue, at least in part, top party members say, because they have been able to make tax rates for the middle class and the highest earners into different discussions.
Lawmakers in the party also cite a raft of polling data over the last year or so suggesting that voters can support forcing the highest earners to accept a steeper tax bill.
Because of that, top Senate Democrats are working to use this week’s vote to tar Republicans as obstructionists standing in the way of middle-class tax relief, and Reid has said in recent weeks that he believes he can round up a majority of the chamber behind the Democratic package.
The majority leader, already facing two announced defections from his 53-member caucus, dropped an estate-tax provision from the Democrats’ tax plan last week, as leaders try to maximize support for their measure.
Democrats have called their bill more fiscally responsible, with Senate Finance Committee Chairman Max Baucus (D-Mont.) declared recently that the GOP plan to extend all current tax rates and patch the Alternative Minimum Tax through 2013 would cost the Treasury $155 billion more than the Democratic proposal.
Sen. Charles Schumer (N.Y.), who helps craft Democratic messaging, said that a more moderate package would allow lawmakers to reduce deficits and make other investments.
“The No. 1 problem, in my view, of America is middle-class incomes are declining,” Schumer told reporters last week. “One very good way to help change that is federal help with education, scientific research and infrastructure.”
Republicans offer a different vision, accusing Democrats of being so fixated on raising taxes that they’re willing to allow lower middle-class rates to expire.
Senate Minority Leader Mitch McConnell (R-Ky.) on Monday cited recent comments from Sen. Patty Murray (Wash.) and other Democrats that suggested they would be willing to let all the current tax rates expire at the end of the year if they don’t get their preferred deal.
“It’s ideological fanaticism. They are so fixated on raising taxes that they’re willing to do anything,” McConnell said in an appearance on Sean Hannity’s radio show. “It shows you how rigidly ideological they are.”
Republicans have also noted that 940,000 small businesses would face a higher tax burden if family income above $250,000 faced a higher rate, at a time when the economy is growing more slowly than it was when policymakers extended the current tax rates in 2010.
And top GOP officials have avoided calling their proposal to extend current rates a tax cut, noting that the current rates on income and capital gains were first put into place in 2001 and 2003.
“With our economy as weak as it is, stopping the president’s massive tax increase on nearly a million small businesses and then overhauling our burdensome tax code is how we’ll get America moving again,” Sen. Orrin Hatch (Utah), the ranking Republican on the tax-writing Finance Committee, said in a statement Monday.
Molly K. Hooper and Ramsey Cox contributed to this report.