PLANK JULY 27, 2012
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Talking Point Memo’s Brian Beutler argues, persuasively, that this week’s tax cut votes in the Senate were a bigger deal than most of us realized. The Republicans voted to extend the Bush tax cuts for everybody, and the Democrats voted to extend them only for family income up to $250,000. It was so obvious that neither bill was going anywhere that the Republicans didn’t bother to filibuster. Predictably, the Republican bill failed, 45-54, and the Democratic bill—which has no chance of clearing the Republican-controlled House—passed, 51-48. No surprises there.
Except, Beutler reminds us, Senate passage of the limited tax-cut extension, with the $250,000 threshold that Obama's favored for years, should surprise us. In the past Senate Majority Leader Harry Reid could never round up enough Democrats to pass the Democratic tax bill in the Democratic-controlled Senate. It’s easy to forget how lame Senate Democrats can be (perhaps because the memory is so painful):
[T]hey didn’t do it in the brief period when they had 60 votes. They didn’t do it via the budget process, which would’ve required rounding up only 50 votes, and they were so scared of every GOP utterance by the fall of 2010 that they didn’t even effectively turn GOP hostage-taking into an effective political weapon. Senate Democrats fractured over whether to set the expiration threshold at $250,000 or $1 million, and even at that higher bar they weren’t able to unite in a way that clarified the Republican’s politically noxious legislative strategy. House Democrats were in even greater disarray. It was a mess.
Obviously many things are different now. Obama’s on the ticket this time. His opponent is a poster child for tax inequity. A sea change in national politics has made it easier for politicians to address issues like inequality.
Smart politicking by Obama, Reid, and Sen. Patty Murray, D.-Wash, chairman of the Democratic Senatorial Campaign Committee, made the difference, Beutler argues. The Democrats still lost two votes—those of Sen. Jim Webb, R.-Va., a Republican-turned populist Democrat who represents a somewhat conservative state, and Sen. Joe Lieberman, a Democrat-turned conservative independent who caucuses with the Democrats. But you can’t blame either of their dissents on fears of voter reprisals, because both men are retiring from the Senate.
Why did Webb and Lieberman bolt? Well, they’re both pretty quirky, irritating people, and both of them voted against both the Democratic and the Republican bills for reasons that are characteristically ... quirky and irritating. Webb refuses to vote against any income-tax increase on wages, even for the rich, because he thinks we need to raise taxes on capital gains and dividends instead. “Two-thirds of the money that is being made by the top 0.1 percent in this country—that’s 140,000 taxpayers—is being made from passive income,” Webb said in a prepared statement after the votes. I’m all for raising taxes on capital gains (they should be taxed at the same rate as wages), but if your beef with the tax system is that it favors the rich, then it’s perverse not to raise taxes on them wherever you can. Lieberman refused to support either bill because he's holding out for “a bipartisan, long-term debt elimination agreement” that includes tax reform and spending cuts. He’s making the perfect the enemy of the good. Me, I’m not persuaded that the “perfect”—tax reform—is even desirable right now.
Perhaps Webb and Lieberman would have voted differently had they thought a.) that their dissent would cost the Democrats a symbolic victory or b.) that this bill had a chance in hell of becoming law. Effectively, they voted in favor of the “fiscal cliff,” which I continue to think is the best option of all. So maybe it’s churlish for me to feel irritated with them at all. But I can’t help being glad to see the Democrats (mostly) hang together, for the very first time, on Obama’s tax increase for the rich.
8 comments
The game is afoot. The political equivalent of the Higgs Boson is out there somewhere. The House of Representatives may vote in favor of something like the Senate Republican plan and then its off to a joint House/Senate committee. All the while, the clock is ticking on the "Bush tax cuts". And oh yes, people are making their way to the polls.
- Doug12
July 27, 2012 at 3:04pm
Webb uselessly not voting for a tax increase as a form of protest over the lower capital gains reminds me of the end of the movie Psycho where the captured murderer is thinking to himself that by not swatting a fly he will convince onlookers of his innocence:
- Nusholtz
July 27, 2012 at 3:53pm
The fiscal cliff is the best option because it cleans the slate. No more Bush tax cuts as the starting point, the ceiling, the floor, whatever. It was the best option in 2010 and is the best option now. But what about all those tax increases at this time of economic crisis? That's right, those tax increases would last about as long as it takes to say clean slate. Let the Republicans drag out a tax cut heavily weighted to the wealthy. And this time the VSPs (including the WP and, depressingly, the NYT) won't be able to hide the Republican tax cut behind the "Bush tax cuts".
- rayward
July 27, 2012 at 3:55pm
I’m all for raising taxes on capital gains (they should be taxed at the same rate as wages), but if your beef with the tax system is that it favors the rich, then it’s perverse not to raise taxes on them wherever you can. Sorry, but I don't buy this. It is like saying if a person has heartburn then it is perverse not to give them allergy medication if that is all you can get. Webb is right, and since the bill is meaningless has the right to argue for the principle.
- blackton
July 27, 2012 at 9:35pm
I'm with blackton. Webb's position is at least coherent--no more taxes on wages at least until we tax capital gains at a comparable rate--and his no vote had the virtue of getting at least one political analyst, i.e. Timothy Noah, to repeat his argument in the media. I like Jim Webb. I like his contrariness. For example, I like his efforts to push the issue of criminal sentencing reform. I am, however, mightily disappointed that he has chosen to retire from the Senate after a single term, not least because it fairly significantly raises the probability that the chamber will revert to Republican hands. (Not that it makes all that much difference given guaranteed filibusters.) I suppose his losing interest in the Senate is of a piece with his varied career in the past. Also, it is altogether possible that Webb wasn't interested in being a Senator in the first place. When he put himself forward as a candidate in 2006, he was viewed as a longshot, to say the least. After Macacagate turned the 2006 contest on its head, he may well have said to himself, "Shit, I might win this thing. That wasn't part of the plan."
- AaronW
July 28, 2012 at 2:42pm
AaronW; blackton Democratic division on a higher tax rate is politically damaging even if lower 15% capital gains and dividends tax may hurt job growth (Why invest in small business with risk and a top rate of 35% when you the stock market is propped up by a top rate of 15%?). High top rates do not hurt the economy and we need the revenue. From 1917 through 1981, the top rate was never lower than 63% with the exception of 25% leading into the depression (and we had a 35% rate leading into the Bush Crash). Also, decoupling taxes from spending like both Reagan (3x debt) and Bush (2x debt) did, can cause spending to rise, because, arguably, spending is without cost.
- Nusholtz
July 29, 2012 at 10:56am
I think it's foolish, but Webb has a point. It's like putting a bandaid on a cut on your knuckle while bleeding out from the cut on your wrist.
- GSpinks
July 30, 2012 at 10:55am
Both Webb and Lieberman are right, as in my view they usually are. We need to shoot for a real fix involving revenue increases, tax and entitlements reform, and serious cost-saving measures that mean cuts to many treasured programs.
- Robert Powell
August 1, 2012 at 12:05pm