Single Tear: Democrats Surprised, Frustrated by Inability to Hike Taxes Even Further

Posted: Mar 04, 2013 5:17 PM

As a general rule, a bad day for Democrats is a good day for your wallet and the American economy.  Politico reports on Harry Reid's winter of redistributionist discontent

Democrats toasted the New Year’s fiscal cliff deal with the belief that they had set a crucial new precedent: Tax hikes would be part of any future deficit reduction package. Two months later, the champagne buzz is wearing off. With about $85 billion in spending cuts — and no new revenue — kicking into gear on Friday, it appears that the exuberance expressed by many Democrats at the beginning of the year was misplaced. Efforts to avert the sequester never achieved liftoff, and Democrats are realizing that new tax revenues are off the table for the immediate future.  

Republicans flexed their muscle in the Senate on Thursday, blocking a Democratic measure that would have replaced the sequester through 2013 with a more palatable mix of spending cuts and revenue increases. A competing measure offered by Republicans that would have given Obama wide latitude in implementing the cuts also wasn’t allowed to proceed. Democratic leaders were left to drag out the same rhetoric they employed in the weeks before the cliff deal, blaming Republicans for another round of Washington gridlock based on an ideological opposition to new taxes. Only this time, it’s not at all clear that the strategy will soon pay dividends. "We’ve tried everything we can," Senate Majority Leader Harry Reid (D-Nev.) told reporters Thursday. "They will not budge on anything dealing with revenue." "They're saying it's more important to keep these tax loopholes than it is to prevent these arbitrary cuts," Obama said today at the White House. Indeed, after ceding the battle over tax rates to Obama in the fiscal cliff compromise and allowing tax rates to rise on the wealthiest taxpayers — rather than take the blame for a major tax increase on all Americans — Republican leaders on both sides of the Capitol decided that they couldn’t afford to lose the tax fight again so soon.

Reid's statement is empirically false (more on that shortly), but when have silly details like facts ever gotten in his way?  Indeed, an irritated Reid scolded reporters late last week for failing to dive deeper into the Democratic tank:

"You know I read an editorial today, and I don’t know whether it was the Times or the Post, where the op-ed writer said, 'You know, let’s call it the way it is. The Republicans aren’t willing to deal with the Democrats.' So all this stuff--Democrats aren’t doing anything, Republicans aren’t doing anything--I believe that you guys have an obligation to report it the way it is.

In Reid's mind, the biggest inhibitor to "progress" in Washington -- aside from Republicans themselves, of course -- is an insufficiently servile media.  "The way it is," as he tells it, is as follows: (a) Republicans are blocking every effort at compromise, while (b) the poor old Democrats have "tried everything" within their power to address these various crises in a balanced way.  Wrong on both counts.  Regarding the sequester in particular, Republicans passed two bills to replace the president's automatic cuts with other reductions, many of which were drawn from the president's last budget.  And the GOP contingent on the Super Committee proffered a compromise that would have headed off sequestration from the get-go.  Their proposed deal even included hundreds of billions in new revenues, but Democrats walked away -- demanding higher tax hikes and never producing a counteroffer.  So that's how Republicans "won't budge," or whatever.  And how have Democrats "tried everything," exactly?  They didn't pass any sequester replacement legislation for a year-and-a-half, and didn't even attempt to do so until last Thursday.  Also, their actions -- or inaction, really -- is what precipitated the need for the sequester in the first place: There would be no sequester if Democrats had accepted Republicans' reasonable compromise in the Super Committee...and there would have been no need for a Super Committee if there hadn't been a Budget Control Act...and there would have been no need for a Budget Control Act if the federal government were operating under an actual budget.  Senate Democrats have refused to offer any budget for nearly four years, thus necessitating these incremental fights every few months.  It's a bit rich for Harry Reid, the leader most responsible for Washington's budget dysfunction, to claim that his conference has "tried everything."  Reid & Co. haven't even tried doing the bare minimum, as required by law.

For their part, House Republicans are pledging to pass a "clean" Continuing Resolution for the balance of the current fiscal year, based on the lower spending baseline triggered by the sequester.  Legislation could move as early as this week. (The GOP seems fairly united around this plan).  They'll also introduce, mark-up, and pass a FY 2014 budget on time, as they have every year since regaining the House in 2010.  President Obama has missed his own budget deadline by several weeks, and Senate Democrats have missed theirs by several years.

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