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Republicans Appear Poised to Accept Tax Cut Plan

Whatever thought that rank-and-file Republicans would balk at extending unemployment benefits for 13 months and running up what amounts to $900 billion in deficits over the next two years has been tempered by national leaders, who are generally enthusiastic over the Obama-brokered tax cut plan which would extend their favored tax rates put in by President Bush for two years. The deal would also lower the estate tax from 2009 levels.

Lamar Alexander, number 3 in the Republican leadership, said that he saw “substantial support” for the deal in his caucus. He expected most of his caucus to vote for it. John Boehner and Mitch McConnell’s statements have not been quite as forceful, alluding to discussing the deal with members, but both of them praised the deal generally.

There’s reason to suspect that the rank and file may not go along with their leaders, as Michele Bachmann alluded to yesteday. But Republicans can see this as an ideological victory for the proposition that you lower taxes in a down economy. That’s what’s behind Grover Norquist’s endorsement:

Of course the deal isn’t perfect, Norquist says. He would have preferred a permanent extension of the income-tax rates, as opposed to just two years, but thinks Republicans should be thrilled at the prospect of revisiting the tax debate in 2012, when Obama is up for reelection, especially when the agreed-upon extension of jobless benefits will ensure that the unemployment rate remains artificially high.

According to Norquist, this GOP victory is really a failure on the part of Democrats, who had every opportunity to extend most of the Bush tax rates (and to take the political credit). Their failure to do so not only exposes the party’s ideological commitment to higher taxes, but puts them on poor footing politically. “Look at the last four years,” he says. “They never intended to extend the rates for anyone, or they’d have done it by now.”

Norquist says Republicans should be especially pleased with the proposal to reestablish the estate tax at a rate of 35 percent (for two years), given Democrats’ desire to return to a permanent rate of 55 percent after going all of 2010 without any estate tax whatsoever. “Think about how badly Democrats wanted [a return to a 55 percent rate],” he says. “They were willing to suck it up for a whole year . . . all those lucky dead people who weren’t sufficiently looted.” Now 35 percent becomes the new baseline, and Democrats are fighting a losing battle.

A lot of this is bunk, but to get into the mind of Norquist, he’s happy anytime the ball moves away from raising taxes of any kind. And regardless of the small bit of new spending in the bill (in the form of unemployment insurance), the ball has moved for away from tax increases. As Jon Chait notes today, Republicans are willing to put up with a lot as long as they can secure tax cuts for the rich. And they probably like this a lot as an issue in 2012, considering they already won it in 2010.

This doesn’t mean that some Republicans won’t refuse to support this deal. I can’t see the last consequential vote of Jim Bunning’s career being for a 13-month extension of unemployment benefits. Jim DeMint and Tom Coburn will have real choices to make. George Voinovich already said he wants all the Bush tax cuts to expire. And there’s a non-trivial contingent in the House who will reject this as well.

That puts more pressure on Democrats to provide enough votes for passage, and with unrest in the Democratic base that’s going to be a tall order. The President said there’s no point in symbolic posturing and not “getting something done” for the American people, but some rank and file Democrats may not agree. In fact, Dick Durbin acknowledged that many Democrats could go their own way on the deal:

A bloc of Senate Democrats could decide not to support a White House-brokered deal on tax cuts and unemployment benefits, thereby putting the plan in danger, according to the second-ranking Senate Democrat.

Senate Majority Whip Dick Durbin (Ill.) suggested Monday evening that many caucus members could threaten to back away from the deal as leverage to ensure it gets what it wants from a potential compromise with Republicans.

“Well there, is know, there is a group that may walk. Let’s say at some point you’ve gone too far,” Durbin said during an interview on NPR. “If the Republicans overreach. If they start including some of their pet projects into this compromise when it comes to the tax code, you could find a walkout on the Democratic side. People saying, ‘You’ve just pushed it too far.'”

Obama and the White House didn’t call it a “framework” for nothing.

UPDATE: Jeb Hensarling, number 4 in the House leadership, expressed some reservations about the deal on Fox News.

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David Dayen

David Dayen