When it comes to the expiring Bush tax cuts, I can’t believe that the Democrats see political peril. Frankly it’s a political gold mine—unless they blow it and extend all of the cuts for two years as repubs want to do.
Recipe for good policy and good politics:
Step #1: Make the republicans own the expiration. They do. Bush and the republican congress designed these cuts to expire. When they expire, that is the result of republican action. Period. This is republican policy and a republican tax hike.
Step #2: Enact a middle class tax cut after the Bush cuts have expired. Merely extending the Bush cuts for the middle class doesn’t give the Dems any credit for a tax cut. Let’s get the credit. Let Bush's cuts expire for everyone, then enact our own cuts. It won't be part of Bush’s tax cuts. It’s our tax cuts—for the Middle Class, not for the Very Rich. (If the Dems extend the Bush cuts for two years, even if just for incomes under $250k, the repubs and media will call it a Dem middle class tax hike when they expire—we don’t need that, especially during an election year.)
Step #3: Tout the billions in deficit reduction from returning to the tax levels of the ‘90’s for the Rich. Everyone is worried about the deficit these days. The R’s and tea partiers are trying to score points with it. Nobody wants to leave their children and grandchildren mired in debt. Well, here is one easy action that takes a huge chunk out of that deficit. Just like that. And because we are talking about the same tax rates we had in the ‘90’s—the decade of the biggest expansion and job growth in the U.S. economy—repub whining about rich people not creating jobs at those tax rates can be ridiculed or laughed at indulgently.
If repubs filibuster Step #2, the middle class tax cut, then let R’s pay for that at the polls in 2012. It will be obvious who is responsible for middle class rates rising and who isn’t. And as a bonus, returning everyone to the rate in the ‘90’s will give us that much more deficit reduction. (Personally, I don’t think it would be such a bad thing for everyone to pay 1990 rates. The real pain is the people who have no job at all, not the taxes being paid by those who do have jobs.)
The worst scenario of all is if the Dems try to extend only the middle class cuts, get filibustered, and then cave and extend all of the cuts as the R’s want to do. Then you get:
-No credit for a tax cut
-The onus of a tax increase when the 2-year extension is up (Then Dems will have to own the increase. It will no longer be a built-in republican policy causing taxes to go up.)
So let Bush’s tax cuts expire. It’s good policy and good politics. Win/win, I’d say.