GOP Tax Message Honed for Campaign

Posted July 26, 2010 at 6:36pm

Republicans are formulating a messaging strategy that ties unemployment to Democratic tax policy and rebuts charges that they support tax cuts for the rich at the expense of deficit reduction.

Many of the major tax cuts enacted in 2001 and 2003 by President George W. Bush and a Republican-controlled Congress are set to expire at the end of this year, and the White House and Democratic leaders in the House and Senate are advocating their extension of tax cuts only for families earning less than $250,000 annually. Republicans are nearly unanimous in supporting an extension for all income brackets, believing the issue could be a winner in the midterm elections.

But in the face of continued Democratic attacks, Republicans are building a more developed defense of their support for tax cuts than in years past. Rather than simply arguing that the government’s money belongs to the taxpayers, Republicans are claiming a direct correlation between extending the Bush-era tax cuts with a small-business owner’s ability to hire more workers and give employees a raise.

“Here’s the point. What they’re saying, in effect, against the advice of any economist I’ve ever met [is] that it would be a good idea to raise taxes in the middle of a recession,” Senate Minority Leader Mitch McConnell (R-Ky.) said Monday. “This is the worst recession since the early ’80s. Raising taxes in the middle of a recession will only guarantee the economy continues either a tepid rate of growth or no growth at all. That’s the point.”

Support for across-the-board tax cuts has long served as the philosophical bulwark of Republican fiscal policy. But beginning about 10 years ago, Democratic arguments that tax cuts should be “paid for” — and that they flowed mostly to wealthier Americans — gained political currency, cutting into some of the GOP’s historical political advantage on the issue.

Democrats also improved the effectiveness of their rhetoric, transitioning from a party that opposed tax cuts in favor of government spending to one that supported targeted middle-class tax cuts and pay-as-you-go rules to keep the federal deficit in check. Recognizing this, Senate Republican leaders have been meeting to construct a message palatable to the Conference and capable of winning the argument.

The refined GOP message includes painting every dollar in increased taxes as a levy on small-business owners, and a key part of the Republicans’ strategy is to use the words of moderate Democrats sympathetic to their point of view. Republicans believe the 9.5 percent unemployment rate and record-high federal deficit have cost the Democrats credibility on economic issues and created an opening with voters for the GOP.

“We realized, kind of like health care, that we faced a big messaging hurdle,” a senior Republican Senate aide said. “It’s so ingrained, when people say ‘tax cuts for the rich.’ … It’s not about tax cuts for the rich, it’s about stopping tax hikes for job creators and small businesses.”

Among the taxes due to rise on Jan. 1 are those on married couples that file jointly, individuals in all income brackets, capital gains and dividends.

Democratic leaders and President Barack Obama are urging that these tax increases be allowed except for families earning less than $250,000 per year, and they are tarring Republicans as deficit spenders for failing to propose specific spending cuts to offset the cost of extending the tax cuts.

But House Republican aides said Monday that the GOP would continue to cast the expiration of the tax cuts as a tax increase on small businesses and the middle class in a tough economy.

One aide said that if the tax cuts are not renewed this session, Republicans would hammer Democrats on the issue all the way into the November elections. Should Democrats choose to “fix” the portion of the tax cuts that apply to the middle class, the aide said, the taxes would still go up for small business.

Responding to criticism that GOP tax policies would exacerbate the federal debt, House Republican Conference Chairman Mike Pence (Ind.) said it was possible to simultaneously lower taxes and the deficit if legislators are committed to implementing policies that create jobs while exercising fiscal restraint in other areas. Pence told reporters Monday that he does not believe lawmakers have to choose between tax cuts and deficit reduction.

“To put our fiscal house in order, we are going to have to walk and chew gum,” Pence said. “We are going to have to practice fiscal discipline and we are going to have to pursue policies to get this economy growing again.”