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Pelosi Urges Democrats on Obama Tax Plan in Caucus Meeting

The consensus from progressive members of Congress is that they want the Obama tax plan up for a vote before the midterm elections. They feel it can draw contrast in their districts, with Democrats on the side of the middle class and Republicans on the side of the rich (I’ll refrain for the moment in mentioning that the “middle class” tax cuts provide more in real dollars to the rich).

Nancy Pelosi agrees with them and told the Democratic caucus that last night:

Speaker Nancy Pelosi tonight implored House Democrats in a private meeting to consider a pre-election vote on extending the Bush-era tax cuts for the middle class while letting those for the rich expire, framing the debate in partisan terms.

Rep. Sheila Jackson Lee told TPM after the caucus that Pelosi ended the meeting with a “resounding” and impassioned speech that fired up the Democrats and might even have brought more on board for a vote.

“She made it clear it’s a black and white issue of who do you stand with,” Lee told TPM. “It’s the middle class and they need to know we are pushing for them. We have to say it over and over again. They’ve gotta see it, smell it, sense it, taste it.”

Cutting against this is the fact that, for a lot of members of the caucus, the answer to “who do you stand with” is “why, our contributors, of course.” Blue Dogs would rather extend all the Bush tax cuts. Interestingly, members in tough races want the vote before the election, which is a pretty good suggestion that they’ll get it.

Meanwhile, lest you think that Republicans are a monolith on this issue, George Voinovich, who just defied his party on the small business bill, wants all the tax cuts to expire, including those on the rich.

Voinovich said Congress needs to tackle tax reform and extending the Bush tax cuts for another two years would only “kick the can down the road.”

My feeling at this stage of the game is we need to do tax reform,” Voinovich said.

That’s a minority position in the Republican caucus, but it’s one less vote for tax cuts for the rich, the main vote that matters.

Coming late in the game is another compromise that would add a tax bracket at $1,000,000, and raise the tax rate on them while keeping everything else the same. It would certainly be cheaper than a permanent extension, though nobody has run the numbers yet. And I support added brackets because it would bring a coalition together of sub-millionaires to raise that bracket without hitting the upper-middle class.

What we still don’t know is which chamber of Congress will go first, whether the vote will happen before the election, and what the nature of that vote will be. In other words, everything.

UPDATE: This has always been in the background, but permanently extending the Bush tax cuts would cost $3.9 trillion dollars in the first 10 years, more in the next 10, more in the next 10, and so on. We used to have occasional tax increases in the country to offset this kind of stuff; Ronald Reagan raised taxes seven out of his eight years in office. I see no prospect of that coming anytime soon, especially if Democrats whiff on this.

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David Dayen

David Dayen