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It is now clear what the Republican strategy is - and I am afraid they will win. The news is all about how the House is not in session and nothing is being done. But this is part of a strategy to force the Senate and President to accept a one year extension of the Bush tax cuts.

In September, the House passed H.R. 8 which is a simple bill that extends the Bush tax cuts for one year, adjusts (alternative minimum tax) AMT for 2012 and 2013, and reauthorizes the accelerated depreciation incentive for businesses. At any time until the new Congress is seated, the Senate could pass this bill as written and the President could sign it and we would avert the automatic tax increases and fix the AMT.

Why would they pass this bill? Think about what is about to happen over the next four days. Nonstop freakout by the press about the impending cliff. The Republican answer is out there quietly now - but this will become more prominent: simply extend it a year while we work out a new compromise. If Harry Reid were to allow a vote on H.R. 8, it would pass easily and bipartisan. Could the President really veto something that would avoid much of the uncertainty over tax rates for this year and next year? Follow me below...

I mention this year because the AMT is not yet extended for 2012. This means millions of families will not know what they owe in taxes because, if the AMT is extended retroactively, it will not apply to them. But right now it does. This means that millions of tax returns will not be filed until we go sort out the fiscal cliff in the next few months. This uncertainty is a real issue as tax refunds will be delayed. Similarly, there is a real problem for payroll calculations if we go over the cliff as withholding will have to change for everyone if rates go up.

So to summarize, there are real concerns now about not knowing what tax rates will be in effect next week and whether the AMT applies to current tax year. Yes, the Republicans have acted in poor faith and are out of control. But remember that they find ways to keep control way beyond their numbers. And I believe this is another case where they have a good chance of prevailing.

The bottom line is that Senator Reid and the President could easily avert the tax uncertainty. I personally prefer to go over the cliff and keep the negotiating leverage. But I am not convinced the Democratic leadership will hold strong. For all his troubles last week, John Boehner has played this well - by keeping the House out of session, there is only one way to avert the cliff: pass H.R. 8 in the Senate and have the President sign it.

What concerns me the most is that this critical moment is upon us and there is very little awareness in progressive circles that our leadership is about to give up its strongest leverage. Harry Reid is talking exceptionally tough today about Republicans - is that because he is backed in a corner?

Calling senators will not work to stop this as the Republicans in the senate will vote for H.R. 8 along with some Democrats. The only way to make sure we go over the cliff is for Harry Reid to not allow the vote and/or for President Obama not to sign H.R. 8.

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Comment Preferences

  •  if boehner can simply elect to not (3+ / 0-)
    Recommended by:
    PeterHug, grrr, deepeco

    bring the senate bill to the floor in the house, then reid can do the same to the house bill.

    if boehner can simply attempt to sit it out, then so can reid.

    there is absolutely nothing boehner can say about reid that wouldn't also apply to him.

    the house bill will never get to the president's desk.

    we're going over the cliff and at some point early next year, the republicans are gonna vote to give most of us (up to 400K? 500K? 750K? 1000K?) a tax cut.

    and there will be much rejoicing and lord norquist will bless them all.

    •  Even more important, Reid can say "even if I pass (1+ / 0-)
      Recommended by:
      agent

      something how can you assure me that you can get republicans in the house to go for it given the last debacle by house republicans."

      "I smoke. If this bothers anyone, I suggest you look around at the world in which we live and shut your fuckin' mouth." --- Bill Hicks

      by voroki on Thu Dec 27, 2012 at 06:03:40 PM PST

      [ Parent ]

  •  Agreed. Best thing Obama can do is *nothing* (0+ / 0-)

    I'm not sure if  it is his latent motives or his lack o ability but I don't trust Obama to come out of a backroom deal without selling out  the middle class. I would rather he have a few more days of vacation.

    I do however trust the suicide bomber attitude of the Republican party and hopeful there distaste for Obama and disregard for public opinion will push us over the "cliff."
     

    •  The question though is (1+ / 0-)
      Recommended by:
      forgore

      Will President Obama stand firm: will the spectre of a market crash weaken the President's resolve? Are all the Democrats behind the 98% tax cut alone as a measure to pass?
      I am always spooked to see Durbin speak: brings back bad memories of the health care debate (talk about a nail biting finish!)

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