The plot is getting weirder in the case of the
bad tax package Harry Reid negotiated with House Republicans, soon scuttled by a
White House veto threat and profound opposition from liberal Senate Democrats. After initially working out the deal with Republicans to let an extension of tax credits for middle class families expire, now Reid is
insisting that any tax deal include making those same tax credits—the Earned Income Tax Credit and the Childcare Tax Credit—permanent. Here's Greg Sargent:
A spokesman for Harry Reid confirms that he will insist that extensions of the EITC and CTC — a top priority of liberals — must be part of any future negotiations over tax reform. Reid spokesman Adam Jentleson tells me:
"Senator Reid would oppose any tax reform deal that doesn’t include extensions of the EITC and the CTC."
The broader question raised here is this: Can the Democratic Party and the president remain united behind a broad set of fiscal principles and priorities once bigger negotiations begin next year with the new GOP controlled Congress over a broad overhaul of the tax code? President Obama is said to see broader tax reform as one area where compromise is possible.
That's a good question, one that provides a tiny bit of insight into what Reid might have been up to. Those two tax credit extensions don't expire until 2017, so leadership aides argue to Sargent that by letting them go now, they'll still be there to fight again for later, when a larger tax reform package is taken up. They argue that in there would have been benefits in the short-term deal Reid made, including an extension of a tax credit for families of higher education students.
The problem with that is turning the EITC and CTC—critical tax breaks for working families—into bargaining chips. That's what Sen. Sherrod Brown, the most vocal critic of the now-dead tax package, argues. "If Republicans are going to go back to more tax breaks for corporations and tax cuts for the richest Americans, we've got to stand strong and emphasize working families getting more of a break than they're getting," he told Sargent. "Republicans need to find out that Democrats will draw a line and say No. We've showed that, and I think come January, we’ll show it again."