Paul Nitze: This showdown can’t be avoided
September 15, 2010
It’s hard to say which term was less likely to enter the popular conversation this summer: “blowout preventer” or “the Byrd rule.” Both rose from obscurity to the front pages. The latter describes the Senate rule that requires 60 votes to break a filibuster, and as the Senate descended from deliberation to dysfunction, political beat reporters turned into amateur historians of Senate rules.
Every tooth-pulling legislative battle of the president’s term has been waged on two fronts. First he’s had to make the political case to the public. Then he’s had to deploy his deputies to the halls of Congress to keep Democratic legislators in line. Republicans have engaged in unrelenting obstruction. Along the way, the president’s image has taken a shellacking as he’s come to be viewed as congressman-in-chief.
For those in charge of protecting the Obama “brand,” the upside to this legislative warfare has been slim. But the lessons learned by the president will serve him well this fall in what may match the health care bill in defining his first term.
Over the next few months the White House and Congress will have to make a call on the Bush tax cuts. Democrats go into this battle with a huge tactical advantage – for the GOP, obstruction is not sufficient. A tax hike on all income levels to the tune of $400 billion per year is unpalatable to either party.
That leaves the policy case, and it’s a case Democrats are struggling mightily to make. When Michael Bennet winds up his stump speech these days, one of his go-to lines is that for the first time ever, American families are earning lower real incomes than their parents. It’s a winner for good reason – it’s true, and it cuts to the heart of our darkening economic future.
Sen. Bennet says all the right things about refusing to mortgage our fiscal future, about providing tax relief to working families, and about finding ways to spur job creation. But when it comes to the Bush tax cuts, the past few weeks have seen him walk away from the president’s position: extend the cuts for everyone who earns less than $250,000 per year.
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Bennet finds himself in the company of eight to 10 Democratic moderates in the Senate who want to either extend all of the cuts in perpetuity, or extend them all on a temporary basis. When you strip the rhetorical wrapping paper off their positions it comes down to this – let’s double down on the fiscal insanity of the 2001 and 2003 Bush tax cuts.
With a few years of hindsight, those bills stand as the true legacy of the Bush administration, and as monuments of fiscal irresponsibility and economic injustice. They were wildly skewed toward the richest Americans, and they dug a gaping, structural hole in the federal budget. The seeds of those bills were sown during the Reagan administration, when Republicans adopted a set of foundational lies about tax policy.
What were those lies? That deficits don’t matter, and in fact help us cut government spending. That tax cuts pay for themselves by increasing income. That tax cuts on the rich spur income at all levels because “small business owners” respond to those cuts by boosting hiring and salaries. And that cutting taxes on dividends and capital gains is rocket fuel for personal investment.
Democrats could fight back with a different narrative, a narrative that benefits from being true. That would require Democrats to make the case that we live in a new Gilded Age that allows some of the wealthiest Americans to pay lower taxes than families making $40,000 per year. They’d have to point out that this new Gilded Age has poisoned our democracy by putting political power in fewer hands, and eroding Americans’ faith in government.
They’d have to speak up about how raising taxes on the wealthy has fewer disincentive effects than raising taxes farther down the pyramid. And they’d have to trumpet what real fiscal responsibility is, namely that it’s a sham unless it means cutting spending on programs we can’t afford while also raising taxes on those who can bear the hit.
Instead, Democrats have played on the GOP’s home turf. They’ve argued that the Obama plan is fine because it won’t hurt the economy “that much.” They’ve talked about how few people will be affected by restoring Clinton-era tax rates on the rich. And they’ve ignored the bedrock fiscal and moral cases.
Right now the White House and congressional Democrats are talking tactics. They’re deciding whether to capitulate to Republican demands for a blanket extension, or hold the line until after the midterms. They’re looking at polling to see how swing-state candidates will fare if they don’t act before November. But in their current fit of short-termism they are doing precious little to change the narrative.
That narrative will take years to take hold, just as it took Republicans years to get traction with their economic gospel. But the effort is worth it. The stars are aligned for the president to make the case now, knowing Mitch McConnell is without his favorite tool, the power to simply obstruct. However that showdown ends, if the Democrats stand on principle, they will earn a badge of fiscal responsibility that will stand them well in 2012 and beyond.
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