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Republicans Nudging Toward Tax Cuts-for-New START Deal

It was interesting to hear Lamar Alexander and a host of others on the Senate floor Wednesday night consistently point to the new START treaty as an exception to their hostage-taking of the chamber over tax cuts for millionaires. The letter which said they would filibuster any legislative items until the Bush tax cuts and funding the government are dealt with pointedly excluded new START, they kept saying. That treaty is on the executive calendar and cannot be filibustered. But it does require 67 votes, and it would be easy for Republicans to say that they will not move that arms reduction treaty until the other matters are dealt with.

But instead, they’re saying that new START was intentionally left out and they could bring it up presently if they wanted. Alexander intimated that he’d vote for it. Even Jon Kyl, who did link the two priorities together by saying that the tax issue must be finished by Monday to get enough time for the treaty debate, also said that Harry Reid could bring up new START at any time:

GOP aides said Republican leaders agreed in discussion about the letter to avoid reference to START.

“START is not a legislative item,” said a spokesman for Senate Foreign Relations ranking member Richard Lugar, R-Ind. “It is on the executive calendar.”

The treaty can “come up anytime Harry Reid brings it up,” Kyl said today.

You have to suspect at this point that new START is being held out as the bargaining chip in the tax cut negotiations. They are not going well, with each side in their respective corners. But it’s clear what will eventually transpire:

Geithner and Lew appear to be stuck in the middle, sources said. A senior Democratic aide said that the White House’s message has been clear: “You can’t leave town without doing something.”

Sources have predicted that the final agreement could include a full extension of the tax cuts for two to three years and an extension of unemployment insurance and a package of other tax extenders.

Though the White House should just call the GOP bluff, put the tax rates back to the Clinton level, and win the next election the way Clinton did after he increased taxes, they aren’t going to do that. The “You can’t leave town without doing something” ultimatum has no wiggle room. So there’s going to have to be some logrolling here. A “grand bargain” of sorts. Republicans get their extension (probably for two years; Mitch McConnell said late Wednesday it’s just a question of how long), Democrats and Obama get some additional legislation passed. And with new START flat-out exempted from the GOP kamikaze scheme, it’s a clear sign that it could be part of the bargain.

The President keeps pushing on new START, bringing in Colin Powell today to voice his support. They’ve begun to play the national security card, saying that losing verification of Russian nukes clearly adds to the vulnerability of nuclear proliferation. Vladimir Putin’s blunt assessment that Russia will increase their nuclear arsenal if the treaty fails also points in this direction. I don’t think Republicans are necessarily afraid of the consequences, but they’d much rather get their way on taxes, and if the cost is allowing a new START vote over unemployment insurance or tax extenders or whatever else, they’d probably go for it.

Ben Nelson saying that new START can wait certainly didn’t help the Presidential gambit, but the Republicans are more important at this stage. And they’re clearly telegraphing the willingness to deal on new START as part of a larger package with the tax extension. I predict this is what you’ll see.

Key question: Will the unemployed and desperate make out in this bargain? You’ll notice that wasn’t exempted from the Republican kamikaze list.

UPDATE: WSJ has more on this. Key graf:

They have considered short-term extensions of a number of business and individual tax provisions that are expired or expiring, such as a popular research credit and middle-class protection from the alternative minimum tax. A likely outcome includes a one- to three-year extension of the Bush-era income tax rates and a two-year extension of the business provisions, according to aides. The package could include Democratic priorities such as extension of tax breaks that benefit the working poor, as well as further extension of unemployment benefits for the long-term jobless.

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David Dayen

David Dayen