Are The Democrats Folding On The Bush Tax Cuts? (Part One)

06/08/2012

Earlier this week, Bill Clinton suggested that the Bush-era tax should be extended in order to avoid the fiscal cliff. He warned that we should try "to avoid doing anything that would contract the economy now."

But, that’s not what he meant to say. He meant to say, "I support [Obama’s] position, and I think on the merits, upper-income people will have to contribute to long-term debt reduction." Clinton needed to recant/clarify his statements in order to confirm his support of Obama’s reelection. But his misstep illuminates the growing indecision among Senate Democratic leaders who can’t come to a consensus about the threshold for extending the Bush tax cuts.

There are two camps: those who say the tax cuts should be extended for families making $250,000 or less per year—Obama and, ostensibly, Clinton fall support this lower threshold—and the other camp, backed by House Minority Leader Nancy Pelosi and Sen. Charles Schumer, who argue that the tax cuts should be extended for families making $1 million or less per year.

The Democratic paralysis is exacerbated by political maneuvering. Alexander Bolton of The Hill, claims that Senate Majority Leader Harry Reid has no plans to push a bill that would allow the Bush tax cuts for the wealthy to expire, instead waiting for House Speaker John Boehner to make the first move, and hoping to force the Republicans to offer a compromise. "It’s the Republicans who are on defense on this issue," said a Senate Democratic leadership aide. "When they hold middle-class tax cuts hostage for the sake of millionaires, it shows whose side they are really on."

But keep in mind that the Republicans have never hidden "whose side they are really on." Instead of millionaires, they just say "job makers" and "job creators."

All the more difficult for Reid, some Democrats facing difficult elections this year want to compromise. "It’s not my preference to extend tax cuts to multimillionaires—that’s not my preference—but I want to keep every option open in the spirit of compromise," said Sen. Claire McCaskill.

But what happened last time Democrats waited for compromise? Oh yeah, they extended virtually all of the Bush tax cuts, even to the multimillionaires. So why not unite behind a plan that would let the tax cuts expire for the uber-wealthy? Because everybody is worried about the anemic economy that might worsen in the face of Taxmageddon. Larry Summers, the top advisor to both Clinton and Obama said earlier this week, "We’ve got to make sure we don’t take gasoline out of the tank at the end of this year."

| NEXT PAGE: Should we extend the Bush tax cuts? |

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