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Surprise: Democrats Threaten "Fiscal Cliff" if GOP Doesn't Cave on Tax Hikes

Cast your mind back to last summer, when virtually every Left-leaning politician and columnist in the country was denouncing House Republicans for "holding the country hostage" to their Tea Party demands, or whatever.  Many, including the Vice President, ramped up the rhetoric by comparing the GOP to terrorists. At stake was whether Congress would secure dollar-for-dollar offsets to President Obama latest debt ceiling increase request.  Democrats -- who at first insisted on a "clean" debt increase with no strings attached -- eventually demanded a deal that included huge tax increases.  Republicans refused.  Many painful machinations and meetings later, a tax-free deal was finally struck.*  (Our credit national credit was downgraded anyway because Standard & Poor's didn't believe our political system was prepared to deal with our crushing long term debt problem in a serious way.  They were right.  Since the downgrade, the responsible House-passed budget has been rejected by a Democrat-held Senate that hasn't even attempted to pass its own budget resolution in three years, and by a president whose budget proposals have (a) been unanimously defeated, and (b) not offered any debt solutions -- by the White House's own admission).  That was how our leaders approached the last fiscal cliff.  With another one approaching, Democrats -- to borrow their term -- are engaging in some reckless hostage-taking brinksmanship of their own:


Democrats in the U.S. Congress warned on Monday they are prepared to let all Bush-era tax cuts expire on December 31 if Republicans continue to insist on extending lower rates for top earners.Senator Patty Murray, a member of Democratic leadership, was scheduled to deliver a tough message later on Monday aimed at bolstering her party's election-year attack on tax cuts for those making more than $250,000 a year at a time of high budget deficits. Murray's speech to the Brookings Institution comes as Senate Democrats prepare to bring to the full Senate this month a bill keeping tax rates low for families earning $250,000 a year or less, knowing that Republicans will block the measure. The plan takes a softer line on dividend taxes than President Barack Obama proposed in his 2013 budget, amid a corporate lobbying push on Capitol Hill. The Senate plan would raise dividend taxes from the current 15 percent to 20 percent rate, but this would be half the rate proposed by the president, according to a summary.

The July vote is seen as an opening volley in a debate that will play out after the November 6 presidential and congressional elections on the fate of the 2001 and 2003 tax cuts - valued at nearly $4 trillion over 10 years - ushered in by then-President George W. Bush. They expire at year's end...In the drive to lower budget deficits that have been breaching the $1 trillion mark since 2009, Democrats and Republicans have already agreed to a series of spending cuts that have mainly hit domestic programs. But to accomplish additional deficit reductions, Washington is beginning to weigh seriously whether to increase tax revenues, cut into defense spending and possibly lower Social Security and Medicare benefits for the elderly.


Translation: Democrats say they're prepared to let taxes spike for every single American taxpayer if they don't get their way on tax hikes for "the rich."  As we demonstrated in a previous post, this approach is problematic for numerous reasons.  First of all, based on the president's own analysis, an across-the-board tax increase on the middle class would be devastating for our weak economy.  Secondly, "the rich" includes nearly one million small businesses, and the Democrats' preferred hike would impact more than half of American small business income.  Third, a significant majority of Americans do not support raising taxes on anyone during in this soft-as-a-grape economy.  Finally, these tax increases would not be used to pay down the deficit, for reasons (again) detailed in my previous post.  Come to think of it, someone should just email that piece to Patty Murray and Harry Reid, just in case they're interested in facts.  Ahem.  Plus, there's this quote from a Democrat Senator, who reveals his party's mindset regarding other people's money:

“The longer [extending Bush tax cuts for higher earners] goes on, the less resources are available,” added Sen. Mark Begich (D-Alaska).

If citizens and businesses are allowed to keep more of the money they've earned, there will be "less [sic] resources available" for the government to spend.  Splendid.  The bottom line of all this: Democrats are threatening to shove all American taxpayers over January's tax cliff unless they succeed in implementing their politically unpopular, economically destructive tax increase on successful small businesses and families.  In all honesty, I think it's a bluff (they've capitulated before), but it's a telling one. 

*Note: I also wanted to remind readers that on two separate occasions during the debt fight, "obstructionist" Republican leaders endorsed some form of a "grand bargain" that included increased tax revenues.  John Boehner had the rug pulled out from under him by the president, then dug in his heels during initial negotiations, and Republicans on the failed "super committee" offered a plan of their own, which Democrats rejected out of hand without presenting any counterproposal.

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