CommunityThe Bullpen

Democrats Figuring Out How to Accept “Concessions” in Spending in Exchange for Inevitable Tax Hikes

Republicans want to use the tax issue as a election tactic, and that’s really the substance of these remarks in the Washington Post claiming that taxes will go up if President Obama wins a second term. But there is some reality behind them. If Obama wins, the Senate will have already passed a bill to extend the Bush tax cuts only on the first $250,000 of income, with the rest expiring. Democrats could simply wait out Republicans, knowing that doing nothing would mean all the tax cuts expire. Then they could return with their own series of progressive tax cuts, ensuring a higher level of revenue than extending current law. Given the play Democrats made on the payroll tax cut earlier this year, it’s entirely plausible that they would get Republicans caught into accepting this, and Republicans may reason that they would do better to get the victory for the Obama Administration over with in the lame duck rather than stringing it out to a more high-profile crescendo for an inevitable result.

But read on here, where Republicans tip their hand that they will ask for something in return for what they’re already planning on giving away:

…if Obama wins, the GOP would have no leverage — political or procedural — to force him to abandon his pledge to raise taxes on family income over $250,000, according to senior Republicans in the House and the Senate.

So they are beginning to contemplate a compromise that would let taxes go up in exchange for Democratic concessions on GOP priorities.

At the very least, that would mean protecting the Pentagon from the budget ax, which is set to whack $55 billion out of national security accounts next year. But it could also mean major changes to Medicare, which many Republicans said could quickly become the new front in the partisan battle over the budget.

“I hope, obviously, the status quo doesn’t prevail” on Nov. 6. “But if things stay as they are, and all the players are generally the same .?.?. finding a responsible reform for Medicare is the secret to unleashing very productive talks that would put in place a balanced solution to our fiscal problems,” said Sen. Bob Corker (R-Tenn.). “If you deal with the Medicare issue, then Republicans are far more open to looking at revenues.”

Sadly, this has far more of a chance at working, despite the complete lack of logic inherent here. Republicans are saying that they would have no leverage on the tax cuts if Obama wins. Then they claim they’ll try to get something in return anyway. Why would a Democratic Party with any savvy give them anything in return? Republicans have conceded their bad hand. This is like allowing a poker opponent to bluff when you can see their cards.

But allow it Democrats might, because many of them hold the same goals:

A group of U.S. senators is quietly attempting to do something almost unthinkable in Washington: craft a bipartisan solution to the nation’s growing deficit in an election year.

They are looking at reviving a proposal by the leaders of President Barack Obama’s failed 2010 deficit-cutting commission to require Congress to act on a long-term plan, said Senator Kent Conrad, a North Dakota Democrat. The lawmakers want to offer a plan during the lame-duck session of Congress after the Nov. 6 election.

“The thing that has the greatest potential to succeed is, in the lame duck, a framework agreement is reached on a grand bargain to reduce deficits and debt by at least $4 trillion over 10 years,” said Conrad, the Senate Budget Committee chairman and a member of the new group of eight senators.

Conrad is only one of a larger group of Democratic Senators committed to this goal, roughly equivalent to the group of Democrats who wouldn’t sign a pledge to separate Social Security from budget negotiations. And they would certainly be willing to “give up” concessions to Republicans in exchange for the changes in the tax structure that Republicans are already conceding will happen anyway. One possibility discussed by this group is to make Bowles-Simpson the default, giving lawmakers six months to come up with an alternate deal.

As Digby points out, Steny Hoyer was seen huddling with Paul Ryan yesterday, presumably about this very scenario:

Hoyer “congratulated Chairman Ryan on his selection as the Republicans’ Vice Presidential candidate, and told him that after the election, both parties will need to work together on a big, balanced plan to address the fiscal cliff,” Hoyer spokeswoman Katie Grant said […]

It was Hoyer who crossed the floor from the Democratic side of the aisle to find Ryan among a throng of adoring GOP colleagues. Hoyer demonstratively shook Ryan’s hand, and a few minutes later the two found some empty space to have what appeared to be a serious discussion about the fiscal cliff.

Ryan told a well-wishing fellow Republican to hold on a minute so he could first talk to Hoyer.

“I’ve got to talk to this man first,” Ryan called out in a voice loud enough to be heard through the open doors of the chamber.

For all the talk of the “big issues” in the election, this is where the major issues around taxes and spending will get decided: in bipartisan huddles where the parties figure out what kind of kabuki dances they will play for the public to get to their desired result.

Previous post

Financial Fraud Prosecutions Coming Soozzzzzzzzzzzzzzzzzzz…

Next post

The Tech World Gets a New Trade Association, Or "How to Read a DC Press Release"

David Dayen

David Dayen