Last week, Senate Democratic Conference Vice Chairman Charles Schumer held a press conference to say that tax reform should be implemented without lowering tax rates for the highest earners.
The White House and Congressional Republicans continue to draw sharp lines on the fiscal cliff showdown coming after Election Day, even as business leaders warned of a big hit to the economy if scheduled tax increases and spending cuts are not muted.
President Barack Obama has vowed repeatedly to veto any deal that leaves in place Bush-era tax breaks for the highest earners — a fact highlighted again in a Washington Post story today. Congressional Democratic leaders have also been signaling less flexibility in recent weeks, though a few rank-and-file Democrats have hinted at compromise.
Some Republicans, preparing for the possibility that Obama is re-elected, are coming up with alternative scenarios to simply allowing the top tax rate to go back up to 39.6 percent. The Post’s Lori Montgomery reported one such scenario posed by policy analysts — keeping rates at 35 percent but raising $55 billion next year from high-income earners, perhaps by limiting their deductions. GOP presidential nominee Mitt Romney has floated a deduction cap as part of his own tax proposals. And the pot could possibly sweetened with a debt limit increase.
But any such idea is still a long way from becoming law; Republican and Democratic aides note that many people are still waiting to see how the election shakes out before laying their cards on the table.
One senior Senate Democratic aide dismissed the $55 billion scenario, saying the White House would drive the deal.
“If Obama wins, he’ll have a plan and he’ll push it hard on the Hill. If he loses, all bets are off,” the aide said.
A Republican leadership aide also dismissed the idea of a $55 billion plan, for now at any rate.
“We don’t know what plan that is or whose plan it is. We’re not proposing tax hikes and aren’t involved in that,” the GOP aide said.
But Republicans in recent weeks, including conservative Sen. Jim DeMint (S.C.), have acknowledged that Obama has the ability to force a tax increase by veto, which would be highly likely to be overridden.
A Hill Republican aide predicted there would be an effort to come together after the elections. “Nobody wants to be that guy that’s going to let us go off of the fiscal cliff. ... The markets are going to start rattling,” the aide said.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.