WASHINGTON -- By choosing to adopt a millionaires tax hike as a means to cover the cost of the president's jobs bill, Democratic leadership has closed out what was once a relatively heated internal party dispute over how to wage the tax policy debate. And for the time being, the victor appears to be Sen. Chuck Schumer (D-N.Y.), the messaging maestro of the party who has become increasingly relied upon to chart policy.
"Since Ronald Reagan, when it comes to the issue of taxes, Democrats have had to travel uphill. Because no matter how fair our tax proposals, Republicans say, 'You are raising taxes, we're not.' And they win," the New York Democrat said in an interview with The Huffington Post on Thursday. "Now we have seen the ability to finally replace that with the clear and crisp message: We are for having millionaires and billionaires pay their fair share and the Republicans are not. And the polling data is strongly on our side. We can win this fight if we can make it."
"There is now broad acceptance by both ends of Pennsylvania Avenue and by the public for this," he added. "If Republicans had a potential advantage like this, they would hit it home day in and day out at every opportunity. And I hope we would be more like them, at least in only that regard ... We have the potential to turn the tax debate around."
Back in December 2010, Schumer first pushed colleagues to abandon the idea of allowing the Bush tax cuts for families making over $250,000 a year to expire. That level of income, he argued, represented an idea of wealth to the vast majority of the country. But most voters were also convinced that they were on the precipice of striking it big, and the prospect of a having to pay a higher tax rate once they achieved that income was a bit off-putting.
Not everyone was won over. Privately, the Obama administration argued that pursuing Schumer's route meant conceding, forever, that anyone making under a million dollars qualified as middle class. There was also concern about having as a leading voice on tax policy a Senator whose constituents include deep-pocketed Wall Street types. Publicly, Democrats were a touch more diplomatic in dismissing the idea. Take, for instance, the Press Secretary's briefing from November 30, 2010.
Q: Senator Schumer had suggested there's a possible compromise on the tax cuts of raising it from 250(,000 dollars) up to 1 million (dollars). What does the president think of that? Does that have the beginnings of a compromise?
MR. GIBBS: I don't -- I don't quite frankly see that it has -- and I don't see that it has moved any Republican. And I think the president has restated the case today for a $250,000 threshold for those filing together.
Progressives, likewise, weren't enamored with the Schumer proposal. When it came to a vote in the Senate, a quartet of liberals -- Sens. Richard Durbin (D-Ill.), Tom Harkin (D-Iowa), Jay Rockefeller (D-W.V.) and now-former Sen. Russ Feingold (D-Wisc.) -- voted nay. Only one centrist, Sen. Joseph Lieberman (I-Conn.) joined them, and the proposal fell seven votes shy of cloture.
Flash forward ten months and skepticism has faded. Aides on Capitol Hill say Schumer lobbied his colleagues behind the scenes to make the millionaire income level the defining contrast with Republicans, calling it a "crisper, cleaner argument." Indications of a breakthrough came in March, when Sen. Bernie Sanders (I-VT), the only avowed socialist in the Senate, authored a provision that mirrors the current one: a 5.4 percent surtax on income above one million dollars. Months later, Senate Budget Committee Chair Kent Conrad (D-N.D.) indicated that he supported a variation of the idea, only to be rebuffed by colleagues facing re-election. When the White House embraced the so-called Buffett rule -- named after famed investor Warren Buffett -- which held that millionaires should not be paying lower tax rates on their income than their secretaries, Schumer finally had his breakthrough.
"When the president came out with the Buffett rule, there was a strong desire among Democrats to put that on the floor in some form, either has a deficit reduction proposal or as an offset for some measure," a top Democratic aide said. "This isn't exactly the Buffett rule but it gets at the same principle."
With the White House's implicit support as a backdrop, Senate leadership instructed Max Baucus, Chair of the Finance Committee, to write a millionaire's surtax proposal to replace the pay-for provision that the president had attached to his jobs bill. Senate Majority Leader Harry Reid (D-Nev.), who was as supportive of the idea as Schumer, pitched it to the caucus during a Tuesday lunch session. And on Thursday, the president himself endorsed the plan, albeit while arguing the "need to reform this tax code" even further.
The Huffington Post contacted the offices of the three remaining progressive Senators who voted against the millionaire's surtax when it came up in December. None had formally taken a position on Schumer's proposal as of Friday morning. But a spokesman for Rockefeller said that the current tax policy debate was "different" than the one that existed in December 2010. This millionaire's surtax, after all, is being used as a means to pay for the jobs bill. It doesn't preclude Democrats from arguing that taxes should go up for those making $250,000 a year when the Bush tax cuts expire at the end of 2012.
"The Senator supports the president's jobs bill," the Rockefeller aide added, when asked about the current incarnation of the legislation.
Indeed, aides to Democratic Senate leadership have said that Schumer's pay-for provision will get the party as close to full caucus support as possible when a vote comes up on the president's jobs bill. But that still leaves Democrats well below the numbers they need to pass the jobs act into law (it won't even be introduced on the House floor). And even Schumer has conceded that the millionaire's tax hike was meant as much to yield political fruit over the long run as to overcome a Republican filibuster.
A comprehensive campaign to build up public pressure on Republican lawmakers on the issue of tax hikes will undoubtedly outlast the window for passing the president's job plan.
"Right," conceded Schumer, when told that an effort to build support for tax hikes on millionaires would take longer than the time allotted for passing the American Jobs Act. "But it is a building block -- and important building block -- to say that we were willing to pay for it by taxing millionaires and billionaires. The president and the Democrats in Congress are on the same page here. And it is a much crisper, cleaner argument."
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