President Barack Obama and House Speaker Nancy Pelosi have drawn a line in the sand: no extension of the Bush tax cuts for families making over $250,000 a year. But they are being challenged from an unexpected quarter.
According to Politico:
“Red-district Democrats are pressuring Speaker Nancy Pelosi to extend Bush-era income tax rates for all brackets, revealing a high-stakes rift between the party’s vulnerable moderates and its safe liberals as the issue increasingly dominates the national debate. “
If Blue Dog and moderate Democrats join forces with Republicans, the House might just pass an extension of the Bush tax cuts across the board for the middle class, the rich, and small businesses, no matter what President Obama and Speaker Pelosi say. Minority Leader John Boehner recently signaled a willingness to cave on stopping the tax increases for the wealthy, but the prospect of an uprising by moderate Democrats may make that gesture unnecessary.
There is a reason that many Democrats are in open revolt. Democrats who represent conservative or Republican districts are looking at a political tsunami dead in the face. The only way they can hope to survive is to bow to the demands of the Tea Party protesters and support keeping taxes low for all Americans. Some Democrats are also realizing the folly of hiking taxes for small businesses in the middle of an economic malaise. The folly is both economic and political. Hiking taxes will make the economic downturn worse. It will also cause more political slaughter among Democrats in 2010 and 2012.
There are dangers no matter what Democrats do.
“The situation may be lose-lose-lose for Democrats. If they raise taxes on higher-income Americans, they risk alienating moderate voters and campaign contributors in closely contested races in Republican-leaning districts. If they freeze the rates for everyone, they risk depressing an already deflated liberal base in districts across the country – including those represented by centrist Democrats. And, if they kick the can down the road with a one- or two-year extension for the top earners, President Barack Obama will have to wrestle with the issue again heading into his 2012 reelection campaign.”
The question remains, what will President Obama do if Congress passes an across-the-board extension of the Bush tax cuts despite his objections? Does he veto the bill and thus takes upon himself the blame for raising taxes on everyone? Or does he back down and accept tax cuts for everyone across the board?
In any case, the man who must be smiling the broadest has a ranch in central Texas. As he sips his ice tea to ward off the thirst of a Texas summer, George W. Bush must reflect on how his successor is helping to seal his legacy. First, Obama accepted the Bush strategy in the War on Terror, even in Iraq. Soon, Obama will possibly be forced to swallow Bush’s tax policy.
And yet Obama will continue to blame Bush for everything. What an irony that is.
Source:Democrats challenge Nancy Pelosi on taxes, Jonathon Allen, Politico, September 13th, 2010