The New Republic

One of the most maddening aspects of the president’s increasingly pointless quest for a deficit grand-bargain last summer was his insistence on negotiating as though he had no leverage. Obama’s offers to House Speaker John Boehner sought to narrow the deficit overwhelmingly through spending cuts rather than tax increases, in a nod to Republican orthodoxy, whereas Democrats (and most of the country) preferred to largely preserve specific programs and raise taxes on the wealthy instead. Worse, the tax revenue Obama was seeking in exchange for all those spending cuts was a tiny fraction of the revenue he could get simply by doing nothing and letting the Bush tax cuts to expire on January 1, 2013. Liberals like myself were at a loss to explain how it was that Obama ended up moving 80 percent of the way in Boehner’s direction rather than vice versa.

(Yes, the House GOP was insisting that deficit-reduction be linked to an increase in the debt-ceiling, without which the government could have defaulted on its debt obligations. But there was no need for the White House to accept that lunatic linkage. And, even if it did, no need to aim for the largest deal possible—the $4 trillion grand bargain—as opposed the bare minimum necessary to raise the debt ceiling, which was the deal they ultimately struck.)

So it’s good to see that, this time around, Democrats have understood quite well how many cards they hold and are determined to play them ruthlessly. According to The Washington Post, Patty Murray, the fourth-ranking Democrat in the Senate, is giving a speech today in which she makes this crystal clear:

“If we can’t get a good deal, a balanced deal that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013,” Murray plans to say, according to excerpts of the speech provided to The Washington Post.

If the tax cuts from the George W. Bush era expire and taxes go up for everyone, the debate will be reset, Murray is expected to say. “Every proposal will be a tax-cut proposal,” according to the excerpts, and Republicans would no longer be “boxed in” by their pledge not to raise taxes.

“If middle-class families start seeing more money coming out of their paychecks next year, are Republicans really going to stand up and fight for new tax cuts for the rich? Are they going to continue opposing the Democrats’ middle-class tax cut once the slate has been wiped clean? I think they know this would be an untenable political position.”

That’s exactly right. As it stands, Democrats are arguing that only the wealthiest two-percent of income-earners should see their taxes rise in January, while Republicans are arguing that no one should see their taxes rise in January. The Democratic position may be marginally more popular at a time when people understand that someone’s taxes will have to rise in order to shrink the outsize deficit. But not much more, since the “tax-raiser” accusation has some potency even if you only want to raise taxes on the rich.

But if all the Bush tax cuts expire in January, then the Democratic position will be that everyone but the rich gets a tax cut, and the Republican position will be that everyone including the rich deserves a tax cut. Or, as the Democratic ads will put it, that we should block a tax cut for 98 percent of the country until the rich get their tax cut, too. That, as Murrary says, is a completely indefensible place to be. And if you know your opponent’s position will become completely indefensible in six months, you have no reason to bargain today, unless he offers the mother of all sweetheart deals. Good for the Democrats for holding the line on this, at least so far.

Update: Commenter Nari224 makes a good point, which I shouldn't have glossed over: Under the Democratic plan, everyone (including the rich) would see their taxes stay the same for their first $200,000 of income ($250,000 for families). Or, if the tax cuts expire in January, everyone (including the rich) would get a tax cut on their first $200,000 of income. The rich just wouldn't get an additional tax benefit on income above that threshold. 

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