There is not a majority in the House of Representatives to support a tax plan that would raise taxes on any taxpayers — not even the much-maligned “millionaires and billionaires.” But that does not mean the House has acquiesced to the automatic tax hikes on every taxpayer slated for Jan. 1. In stark contrast to the failure of “Plan B,” the House already succeeded in passing its “Plan A” back in August: H.R. 8. That bill would extend all current tax rates for one year, while committing to comprehensive tax reform in 2013. It passed the House on a rock-solid 256-171 vote, with 19 Democrats joining 237 Republicans.
The Senate has taken no action on the bill. Harry Reid did, for show, pass a Senate bill to raise taxes above $200,000 only, as favored by President Obama. But that bill, S. 3412, violated the Constitution’s requirement that revenue bills originate in the House. It would be legally void even if it did pass the House, which it won’t.
So now the ball is in Harry Reid’s court. H.R. 8 is the bill that passed the House. It’s the only duly-enacted bill to pass either chamber. He should call it up, amend it — if he can — and appoint conferees to reach a final agreement. President Obama will almost certainly sign any deal that can pass the House and Senate.
The economic stakes are huge. Boehner’s Plan B millionaire tax would have done significant damage to the U.S. economy. The Tax Foundation estimated the long-run impact of Plan B and found it would knock 0.92 percent off of GDP. That’s less than a third of the 2.88 percent that Obama’s plan would shave off the U.S. economy, but it’s still considerable. The do-nothing option? That’s really ugly. Allowing taxes to rise on all Americans as contemplated under current law would mean a 9.61 percent hit to GDP, along with a 7.35 percent decline in wages and a 23 percent drop in private business stocks.
Now the insistence of House Republicans to make this all-or-nothing must infuriate Democrats, especially President Obama, who famously explained he would support higher taxes on capital even if they hurt the economy so much that they resulted in lower revenues. He said “fairness” was more important.
But like it or not, the American people elected a House of Representatives that is committed to stopping all tax hikes. They are so committed that they refuse to put their fingerprints on a deal to raise taxes on some even if it means risking automatic tax increases on all. Speaker Boehner tried his best to alter this reality for the sake of compromise. He couldn’t. So this is the reality Obama and Reid must deal with.
Why would Reid and Obama insist on tax hikes for everyone in this context? The economic suffering would be serious and widespread. They have repeatedly claimed that current rates should be extended for 98 percent of Americans. The intransigence of House Republicans has set up a scenario in which we’ll either have economically destructive tax hikes on every American, or we’ll postpone all the tax hikes for a year while we move forward on comprehensive tax reform. Democrats should do the right thing for the U.S. economy and choose the latter option.
Copyright 2012 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate. Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at phil@americancommitment.org.
downtownresident posted at 10:19 am on Sun, Dec 23, 2012.
Phil,
You're an idiot.
Giving more tax breaks to the richest millionaires during the Bush administration did nothing to stimulate anything but the bank accounts of the rich.
Next year, the rich and well healed will still be just as greedy as this year and you will still be beating the "give the rich more money" drum.
IceCat posted at 10:21 am on Sun, Dec 23, 2012.
American Commitment just another right wing group that won't release it's donors or who is on it's board of directors.
"There is not a majority in the House of Representatives to support a tax plan that would raise taxes on any taxpayers"
The writer is wrong with this comment. A majority of the House (D's and some R's combined) would vote to raise taxes, it just that the leadership won't allow a vote on the subject unless a majority of the Republicans approve, and that's not going to happen.
"while committing to comprehensive tax reform in 2013"
Once again, the writer wants to kick the decision down the road. If the country wants to get it's fiscal books in order, now is the time to make the painful decisions.
chatmandu002 posted at 10:35 am on Mon, Dec 24, 2012.
Phil,
You have hit a nerve with the local liberal/progressive/socialists. One continues to attack the rich and the other wants to attack you and your organization. They offer no solutions other than confiscating other's wealth. They also fail to note that the Senate has not passed a budget in almost four years while the House of Representatives has passed a budget bill every year.
Your option is still "kicking the can down the road". But what other option do the conservatives have when the party in power refuses to cut spending or make the necessary changes to welfare and entitlement programs.
wdgnas posted at 7:32 am on Tue, Dec 25, 2012.
give the job creators their tax breaks when they start creating jobs. otherwise sit down and shut up.
chatmanduoo2: think back to 2001 to 2007. But what other option did the liberals have when the party in power refuses to cut spending for iraq and afghanistan, and lets not forget the bank bailouts. where was your outrage then.
Rich posted at 11:10 am on Wed, Dec 26, 2012.
"The intransigence of House Republicans has set up a scenario in which we’ll either have economically destructive tax hikes on every American, or we’ll postpone all the tax hikes for a year while we move forward on comprehensive tax reform."
But you haven't elected people with the competence to "move forward on comprehensive tax reform". We elected a bunch of egotistical mental midgets and the best we can hope for is that they stalemate one another. We will get destructive taxation eventually, because the incompetents we elected really haven't got what it takes to do anything else. May as well get it over with.
Masterrogue666 posted at 7:31 am on Thu, Dec 27, 2012.
I seem to remember the Democrats allowing persons to get home loans, even though they weren't a good "risk". Because of that FAILURE, we had the housing market crash. We've got to balance tax increases with reducing expenditures. Otherwise, our NATION will fail....
Cerulean posted at 8:42 am on Fri, Dec 28, 2012.
This must be a Bret Ferra editorial decision.
downtownresident posted at 2:50 pm on Fri, Dec 28, 2012.
the Democrats allowing persons to get home loans
downtownresident posted at 2:52 pm on Fri, Dec 28, 2012.
Masterrogue666 ,
You've said some outrageous things here, but this is just ignorant. "the Democrats allowing persons to get home loans". The Democrats didn't approve the millions of bad loans, the thieves in the banking industry and the thieves at Fanny and Freddy did it all by themselves.
if your going to spout drivvel, at least make it believable.