Tax Cuts Update: Despite Schumer's Threat, There's Little Appetite To Let Them Expire

WASHINGTON -- This past weekend, as the White House and congressional lawmakers negotiated away a temporary extension of the Bush tax cuts for the wealthy, dejected liberals were offered one last droplet of hope.

Amidst the talk of capitulation, Sen. Chuck Schumer (D-NY) suggested that rather than extend current rates for two years in exchange for other tax-cut goodies and unemployment insurance, the party might simply let all the tax cuts expire. After all, the president could come back next Congress and build his own package of middle-class tax cuts, branded under the Obama (not Bush) name.

"There are lots of people in our caucus who do have that appetite [to let all rates expire]," said the New York Democrat.

If that appetite needed further whetting, it came Monday morning in the form of an op-ed from The New York Times's Paul Krugman.

"Mr. Obama should draw a line in the sand, right here, right now," wrote Krugman, the earnest voice of the progressive masses. "If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.

"Yes, letting taxes go up would be politically risky. But giving in would be risky, too -- especially for a president whom voters are starting to write off as a man too timid to take a stand."

Yet acts of political defiance -- despite Krugman's wishes or Schumer's provocations -- don't appear to be in the cards. On the Hill and in the White House, the notion that Democrats would let the Bush tax rates revert to previous levels is considered, to put it bluntly, a bluff. And not even all Democrats have been handed the right script.

Last Thursday, Senator Tom Harkin (D-Iowa) told The Huffington Post that there was talk in the caucus about letting the rates expire. "We'll come back in January and we'll build our own [package]," he said. "That's right, that's a possibility that we could do. And maybe the pressure would be on a little bit more to address the real problem -- who's getting pinched on these taxes?"

Just hours later, however, Sen. Dick Durbin (D-Ill.), the senator tasked with whipping votes, said a standoff along the lines of what Harkin envisioned wasn't likely to happen.

"It's not totally off the table," said the Illinois Democrat. "But I'd tell you, we have to accept the reality. The reality is that raising taxes for middle-income families is not good for them, it's not good for the economy. I hope that the Republicans will acknowledge that at some point."

Why, if the sentiment exists, is the party not giving more serious consideration to the idea of ending the lame duck session with the tax debate unresolved? For starters, as a senior Democratic aide put it, the White House's message has been clear: "You can't leave town without doing something." Press Secretary Robert Gibbs said as much during a December 1 briefing. "[T]he issue of taxes needs to be resolved before anybody can go home and certainly before the end of the year."

The administration doesn't want that fight. As one White House adviser noted, the final deal (already written on Republican terms) "would be a lot better than what we would get next year" when the president would have to rely on a House of Representatives controlled by Republicans. Moreover, while only 26 percent of respondents, in a recent CBS poll, said they favored continuing the current tax rates for all individuals, only 14 percent said that they would support the expiration of tax rates.

And yet, it's hard to not notice the intra-party angst over this capitulation. Rep. Anthony Weiner (D-NY), for one, tweeted a "memo to our president" on Monday morning. "Why are we always punting on 3rd down? Lets get our offense on the field."

A top Senate aide, meanwhile, predicted that there would be "lots of nay votes on a White House compromise," though likely not enough to sustain a filibuster. A far more difficult calculus faces the party in the House, as The Huffington Post's Howard Fineman reported. But even then, most observers expect leadership to let only enough disaffected members vote no so that it doesn't endanger final passage.

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