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House GOP will allow show vote on Obama's tax proposal

 

House Republicans will allow a vote next week on the Democrats' bill to extend the expiring Bush tax cuts for households earning less than $250,000, House Speaker John Boehner (R-OH) announced Thursday.

Boehner said that Republicans were "more than happy" to bring to a vote the Democratic bill, which passed through the Senate on Wednesday in a narrow 51-48 vote.

The Democratic legislation extends the tax rates established by the President George W. Bush in 2001 and 2003 (referred to by many as the  “Bush tax cuts”) for only those households making $250,000 or less; tax rates for the highest income group would be allowed to spring back to their rate at the beginning of 2001.

Republicans will couple a vote on their own tax bill, which would extend the rates across the board for another calendar year, with the Democratic bill. These tax cuts were first set to expire at the end of 2009, but President Obama agreed with Republicans on legislation to extend the rates for another two years.

"If our Democrat colleagues want to offer the president's plan or the Senate Democrats' plan, we're more than happy to give them a vote," Boehner said.

Republicans are eager to allow a vote because the Democratic legislation is expected to fail in the GOP-led House. The Republican bill will likely pass, though neither bill will likely advance to the president's desk. Rather, both votes are largely for show and intended to put the other side's lawmakers on the record on taxes.

The battle over extending current tax rates equals nothing more than a common messaging war that both sides are happy to fight leading up to November's elections. Republicans want to be able to paint Democrats as trying to raise taxes on small business owners, while Democrats argue that Republicans want to give tax breaks to the richest Americans.

“The only thing standing in the way of a middle income tax cut is the House Republicans,” House Minority Leader Nancy Pelosi (D-CA) told reporters today, “The Republicans want to spend hundreds of billions on an extra tax cut for people making over $250,000 a year.”

Obama echoed that call today, telling reporters that “the only thing that is going to prevent the vast majority of Americans from not seeing a tax increase next year is if the House doesn't act.”  Obama said that he and his cabinet members will continue to make that point in the coming days.

Both sides have conceded privately that this is a fight that will likely go down to the wire, when the Bush tax cuts are scheduled to expire on January 1, 2013. In the weeks before that deadline, Congress will need to address a number of issues that, taken together, have been deemed the “fiscal cliff” because of the potentially devastating consequences they could have on the economy if Congress does not act. 

In addition to addressing the scheduled expiration of the Bush tax cuts, Congress needs to reallocate automatic cuts scheduled to take effect as a result of the deficit Supercommittee’s failure last year. Because of their failure, automatic cuts to defense and non-defense agencies could result in an estimated 2 million jobs lost in 2013, a potentially massive blow to an already struggling economy.

In a speech at the Brookings Institution last week, Sen. Patty Murray (D-WA) threatened to use the extension of the tax rates as a bargaining chip going into year-end negotiations, which will also include the expiration of the payroll tax cut, as well as a fight over funding the government and raising the debt ceiling.

Murray says she could see a scenario in which Democrats allow all the tax cuts to expire, in an effort to put Republicans' feet to the fire so that they raise revenue to address the nation’s deficit. 

“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?,” Murray said in the speech, “Are they going to continue opposing the Democrats’ middle-class tax cut once the slate has been wiped clean?”