Barack Obama And Bush Tax Cuts: Moving Quickly To Shape Coming Debate

WASHINGTON -- The Obama administration is making a preemptive move to change the script of the Bush tax cut debate after losing a months-long political standoff with congressional Republicans at the end of 2010.

The White House on Tuesday issued a report by the National Economic Council highlighting the benefits of Obama's position of continuing the cuts for those with annual incomes of less than $250,000. The release of the report was coupled with a conference call featuring Vice President Joseph Biden, in which he and other administration officials applied deep gravity and meaning to a vote that virtually everyone assumes will fail.

"I hope everyone understands the consequences of tomorrow's vote in the United States Senate," said Biden.

Coming one day before the Senate is set to hold procedural votes on the expiring Bush tax cuts, the call was a tactical effort to shape public perception on an issue that will dominate Congress and the campaign trail in the coming months. The White House wasn't going to let events and alarm force its hand again, as it did at the end of 2010.

"The president has obviously said that he would veto anything that extended tax cuts for millionaires and we don’t think that Republicans are going to want to see taxes go up on middle-class households," said White House spokesman Josh Earnest. “If there are Republicans who don’t think that they need to act now to provide certainty to those Americans who live in households making $250,000 a year, then I’d be happy to hear them explain why."

The statement from Earnest didn't exactly break new ground on procedural or policy fronts. But the timing was telling, at least with respect to the tactical decisions being made inside the West Wing. Only an unbalanced optimist anticipates progress on the tax cut front in the Senate on Wednesday. Holding a vote and ratcheting up its importance is the first step in laying the foundation for lame duck negotiations.

Capital Hill Democrats argue that they have some winning arguments to play this go-around. Public opinion data is squarely behind the idea of letting the tax cuts for the highest incomes expire at the end of the year. In addition, the package that Senate Majority Leader Harry Reid (D-Nev.) will put forward on Wednesday includes three provisions, dating back to the stimulus, that provide tax breaks for the middle class: a $2,500 credit for college tuition costs; an earned income tax credit, and an enhanced child tax credit.

With those provisions not included in the Republican proposal, as authored by Sen. Orrin Hatch (R-Utah), Democrats are poised to argue that the GOP plan includes a hike on middle-income earners.

Republicans, in turn, will continue to argue that by not extending the Bush tax cuts for the upper-income brackets, Democrats and Obama will be raising rates on job creators and small businesses. One top GOP aide also argued that because Democrats leave the issue of the estate tax unaddressed in their bill, they would facilitate a major increase on that front as well. Without any action, the estate tax will go from a 35 percent rate on assets over $5 million to a 55 percent rate on assets over $1 million. The Democratic Party position is to go back to 2009 levels, which was a 45 percent rate on assets over $3.5 million. But they want to address that outside of this bill.

Both bills would only extend their tax policies through 2013, in hopes that more comprehensive tax reform could be tackled by then.

Time will tell whose ammo proves better. But what seems abundantly clear is that tomorrow is the unofficial start of this debate, not the beginning. The procedural elements of what happens are still unclear. Democrats will likely offer Republicans a chance to have a straight-up vote on each party's bill. If that fails, they will likely ask GOP leadershipd not to filibuster and to allow the Reid bill to come to the floor for debate. They will then allow consideration of the Hatch bill as an amendment (which would require 60 votes to pass) before trying to move the Reid bill off the floor (which, likewise, would need 60 votes).

"We are discussing the threshold," is all Senate Minority Leader Mitch McConnell (R-Ky.) would say at a media stakeout on Tuesday.

“I think we’re going to run into some real procedural challenges up on the Hill, but that’s another issue,” Biden said. “As usual, we’ll probably have a 60-vote threshold even to be able to get to it, but that’s being worked on now in the Senate.”

All of which is a long way of saying: don't expect new laws to be made on the Senate floor. Just theater, but an important opening act nonetheless.

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