I love this clip from The Simpsons. It perfectly describes why Republicans and their attendant Villagers are pushing so hard and loudly to 'do a deal' before December 31st. Here's the money quote from Mr. Burns:
Think of the economy as a car, and the rich man as the driver.
If you don’t give the driver all the money, he’ll drive you over a cliff.
That's exactly what Republicans are threatening. I know there have been a lot of posts about this so-called cliff, but I think it's worth listing what happens on January 1st if Democrats do absolutely nothing:
- The top tax rate for individuals goes up by about 4 percentage points.
- Capital gains rates increase to 20 percent.
- Dividends are taxed as ordinary income, rather than at the Bush-era 15 percent capital gain rate.
- Estate tax rates return to 2001 levels, and the taxable cap returns to $2 million instead of $10 million.
- Payroll tax holiday expires
Some of these consequences aren't great for the middle class, which is why House Democrats are pushing so hard to force a vote on the Senate bill extending those tax cuts while allowing the upper-income tax cuts to expire.
Still, the White House is signaling that they're comfortable with waiting until January, and rightly so. Anything they can do in December, they can do in January, retroactive to January 1st. But by waiting until January, Democrats will be dealing from a position of pure strength then, because any vote in January will be a vote to cut taxes, not increase them.
The real sticking point, by the way, is the estate tax, which no one is talking about. It's not just a problem with Republicans, but also Blue Dog Democrats. Senator Mary Landrieu (D-LA) is one of those who refuses to vote on any package that doesn't preserve estate tax levels at a $5 million cap and 35 percent tax rate. Evidently Senator Landrieu is fine with establishing a permanent plutocracy in this country, because nothing is more helpful for that than the current ridiculously low estate tax rates and high estate exemption of $10 million.
We've already seen rumbles that Republicans intend to hold the debt ceiling hostage yet again. This practice has to be stopped and it has to be stopped now. As long as they think they have some leverage, Republicans will continue to try and cut Medicare, Medicaid and Obamacare while holding the debt ceiling hostage to do it. Democrats have to be pushed to stand firm, and if the tea party is pushing Republicans to jump into the abyss, so be it.
As for sequestration, it will certainly be better to look at the budget in light of more guaranteed revenue right now than it will to start playing trade-off games with it. Sequestration was a Republican idea, and they should own it outright.
When the new Congress convenes in January, the tea party will have less leverage and Democrats will have all of the messaging on their side. There is no upside for Republicans. They need to learn this early on.
It is not 2009. There is no reason to continue to put up with their nonsensical Lucy and Charlie Brown football-snatching game. They need to learn that the voters, not the billionaires, will decide this debate.
If you want to push Congress to extend the middle class tax rates, you can join the action here.