Tax cut tactics

TAX CUT TACTICS…. Last week, senior White House advisor David Axelrod caused quite a bit of trouble when he suggested the administration was prepared to cave and give Republicans the tax cuts they want. Yesterday, on “Meet the Press,” he was a little more cautious, but didn’t exactly speak from a position of strength — he would only rule out a “permanent extension of tax cuts for the wealthiest Americans,” which keeps a temporary extension prominently on the table.

Part of the larger problem is that we’re not looking at two competing approaches for everyone to consider. There’s one Republican plan — a permanent extension of Bush-era tax rates, adding trillions to the debt for a tax policy that was a demonstrable failure.

But there isn’t a single Democratic alternative — by some counts, there are six or seven counter-proposals — which necessarily makes the political debate more difficult. There are some indications, however, that the left is starting to rally behind a single approach. Greg Sargent had this report late on Friday:

One of the most powerful labor organizations in the country is throwing its weight behind a legislative strategy on the Bush tax cuts in which Democrats would hold a vote on just extending the middle class tax cuts permanently, without any vote on the high end ones.

“The election is over — we believe Congress ought to get down to business and vote on extending the tax cuts for the middle class, and not vote on the tax cuts for the rich,” Bill Samuel, the legislative director of the AFL-CIO, told me in an interview this afternoon. “Congress should not extend the tax cuts for the rich — not even temporarily — because that would do more harm than good for the economy.”

AFL-CIO’s declaration represents the first major institutional endorsement of taking this approach in the lame duck session, suggesting the possibility that labor and leading liberals in Washington may begin coalescing behind it. More broadly, the move is also a sign that labor and liberals will demand that Obama and Congressional Dems draw a hard line against Republicans in the tax cut fight.

This is, you’ll notice, the original approach adopted by President Obama — tax cuts for the middle class, a return to Clinton-era rates for the wealthy. Indeed, this was Candidate Obama’s idea as presented to voters in 2008, when he won the presidency fairly easily.

It’s hard to say, at least at this point, whether the more centrist elements in the Democratic caucus could support this, but either way, there’s benefit that comes with having the left stake out a clear, compelling, and popular position on how best to proceed — there’s a rival pole to match the right’s.

Here’s hoping this helps change the trajectory of the debate, at least a little, because at this point I continue to marvel at how badly Dems are playing the game. The best option seems so painfully obvious to me that I’m amazed Democrats are afraid to try it: bring middle-class tax cuts to the floor and dare Republicans to kill them. If the GOP caves, Dems get the policy they want. If the GOP kills the tax-cut package, Clinton-era rates return for everyone, which is probably the policy Dems should want, and the headlines read, “Republicans kill tax cut compromise; higher rates kick in Jan. 1.”

I’ve never seen a party so afraid of doing the obvious, popular thing that puts their rivals on the defensive. It’s a gift-wrapped present that Dems seem afraid to open.