By Jared Allen - 04/26/10 10:00 AM EDT
House Democrats are encouraging members to make the tax cuts they’ve delivered a key part of their reelection strategy.
Democrats point out that federal taxes are lower now than they were during George W. Bush’s presidency, and they see this not just as an area of strength, but as a vital part of their sales pitch to voters this November.
But efforts to win in November on a tax-cutting platform will be complicated by the nation’s record budget deficits, which makes tax hikes look more likely.
Several business groups warned Friday that tax increases are “inevitable” given President Barack ObamaBarack ObamaCoal company warns of mass layoffs Veep auditions in overdrive Green mega-donor launches pro-Clinton effort in Pa. MORE’s spending plans and the high budget deficit. They also criticized Obama’s call for higher taxes on wealthier Americans.
Further muddying the water is the fact that several of the most endangered Democrats have staked their reputations on their commitment to seeing the deficit reduced as quickly as possible.
Democrats believe their actions this year have given them credibility on budget and tax issues.
Democrats implemented a “pay-as-you-go” law and then created an independent deficit-reduction commission.
But those same actions could also cause the party tax headaches in the not-too-distant future.
Republicans, who recently ramped up their warnings of looming Democratic tax increases on everything from gas to goods to income, are gearing up to make taxes a campaign theme of their own.
“Democrats have about as much credibility on the issue of taxes as [Rep.] Charlie Rangel does. What will they tout next? Their record on tickle fighting?” Republican National Campaign Committee spokesman Ken Spain said.
Democratic leaders are pushing members of their caucus to sell themselves as “responsible” tax cutters as part of an effort to strip Republicans of one of their best weapons.
“The Recovery Act was one-third tax cuts, which Republicans voted against,” said a Democratic leadership aide. “This has to be an issue that Democrats can't fear.”
By and large, Democrats don't see a direct contradiction between touting tax cuts and their work to reduce the deficit. But at least one fiscally conservative Democrat who did not want to be identified did express concern that some voters will see that the two goals are on a collision course.
“The worst thing we can look like is hypocrites,” this Democrat said. “Then we're no better than Republicans.”
President Barack Obama campaigned on a promise to not raise taxes on individuals making less than $200,000 a year, and it’s become a rule among Democrats in Congress that taxes can only be raised on individuals making more than $200,000 and families with incomes above $250,000.
Treasury Secretary Timothy Geithner has said the administration plans to let the Bush tax cuts expire for the wealthiest 2 percent of U.S. taxpayers, which would raise almost $1 trillion for deficit reduction.
At the same time, Democrats have pledged to extend the Bush tax cuts for 98 percent of Americans. A permanent tax extension of these middle class tax cuts would cost around $2 trillion, a figure that’s already causing Democrats to shudder.
Even a temporary extension of the Bush middle class tax cuts would be a costly addition to the budget forecast, and would require Democrats to confront the question of how to offset the cost in accordance with their “pay-go” law -- or how to get around it if they decide to forgo offsets.
Speaker Nancy Pelosi (D-Calif.) has said repeatedly the government can increase its necessary revenue by increasing the size of the economy instead of raising taxes.
“We want to grow the economy so the revenue stream increases,” she said in comments earlier this month.