While Congress ordinarily boots every piece of difficult legislation to the last possible moment, the November election is speeding up one extremely issue: the expiration of the Bush tax cuts.
The New York Times reports that both sides are eager, even "giddy," to have this debate before the election, as both see it playing well for their side: Republicans crave a debate about what they call the "biggest tax increase in history" in the midst of a sluggish economy, while Democrats would love to make every GOP legislator defend massive tax breaks for the wealthy at the cost of the lower and middle classes.
If Congress does nothing, the Bush tax cuts expire on January 1st, raising taxes by $221 billion annually. This puts the impetus on the GOP to come up with a proposal to extend them.
But the plot thickens when you consider that taxes don't just go up on the wealthy but on everybody, meaning the impetus is on Democrats to "decouple," in the words of Chuck Schumer (D-Elitetopia) the middle class from the upper class in the legislation. What that means, though, is up for grabs. Obama wants taxes raised on everybody making more than $250,000 a year, but that could include the sacrosanct category of small business owners, which would allow GOP legislators like Dean Heller (R-Sprawlistan) to say stupid things like this: "I believe what [Democrats'] goal is, is to tax every small business."
Given the GOP dominance in the House and the clusterfuck that is the filibuster-burdened Senate, chances are the House passes some bill continuing the tax cuts and paying for them in some offensive way, like defunding food stamps and abolishing the HUD, and the Senate forms around the bill like mud. But unlike much of Congress' disfunction, this one can't just end in a Senatorial malaise: the cuts expire if Congress can't get anything passed. This means the fight will come down to some squirmy compromise among a sliver of the Senate. Expect last-minute meetings with Chief Justice of the Supreme Court Harry Reid, Mitch McConnell, and Obama to pass something through, and maybe even expect Olympia Snowe (R-Crankytown), Ben Nelson (D-Don't let the door hit you on the ass on the way out) and other center of the aisle legislators to be catered to as a retirement present.
Also, by the time this fight comes around, Mitt Romney will be the leader of the GOP. While Romney might think a fight over lower taxes plays into his hands, it also highlights his own extremely low tax rate, a squeamish issue for the quarter-billionaire. To be fair, just because Romney's economic argument for lower tax rates on high-income earners benefits him and his friends doesn't make it wrong (it's wrong for so many other reasons), but it does create the perception that he's coming to loot the federal treasury in favor of the wealthy. This puts Romney in a tough spot: he can't abandon his party's central platform, but he must argue for a tax rate that makes him seem personally invested in a rigged taxation system. Remember, voters don't have to be convinced of any of this to turn against Romney; merely the suspicion that he's Scrooge McDuck could keep moderate Republican voters home or drive away independents.
On the bright side, the country might finally get a discussion over tax equity and income inequality, which it sorely needs. Nelson, for instance, wants tax cuts paired with spending cuts, leaving the question to Republicans: what programs should be cut to allow lower taxes on the wealthy? Will they close corporate loopholes, or cut health services to the poor? (They could cut defense spending!)
But cutting discretionary spending won't come anywhere near replacing the lost revenue created by the Bush tax cuts, which means this debate might also call the GOP's bluff on federal debt and annual deficits. The Bush tax cuts, with the wars in Iraq and Afghanistan, were far and away the biggest contributor to the current debt:
(Chart via Center on Budget and Policy Priorities, which probably throws terrible Christmas parties)
The CBO has practically taken out a billboard letting Congress know that the Bush tax cuts' expiration will reduce annual deficits and spur long term economic growth, while their continuation will ballon those deficits and massively increase unemployment. And as Daniel Gross points out at the Daily Beast, this group of legislators has been vehemently arguing that deficits create inflation and unemployment and all sorts of other scary stuff, but are now arguing that somehow the deficits created by the extension of the tax cuts won't do any of that. That doesn't make a whole lot of sense.
This puts the Republicans in an ideological corner, if not a political one: do they actually want lower deficits, or do they just want tax cuts on the rich? What happens when they can't have both?
We may find out sooner than we thought.
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