Economy

Are Romney And Obama Competing For The Austerity Prize?

Brian Beutler | May 25, 2012, 6:41AM

President Barack Obama and Mitt Romney

The American economy will sink back into recession if Congress fails to unwind a messy coil of austere fiscal policies that will trigger automatically at the beginning of the year.

Across the spectrum, experts are imploring political leaders not to be myopic and unyielding: delay the budget cuts until the economic recovery really takes hold, but be ready with a more considered course of deficit reduction when that moment arrives.

Yet Barack Obama and Mitt Romney, and their surrogates on Capitol Hill, are locked in a fight over which candidate and which party will more quickly and effectively reduce the deficit -- the opposite of what economists say we need.

The Obama administration and campaign trumpet data and articles showing that Obama's supposed spending binge is a right-wing fabrication. Paul Ryan -- the GOP's official spokesman on fiscal issues -- boasted that a Republican victory in November will give his party a mandate to turn his controversial spending-slashing budget into law.

"If we make the case effectively and win this November, then we will have the moral authority to enact the kind of fundamental reforms America has not seen since Ronald Reagan's first year," Ryan said.

At the same time, the parties are at pains to paint their rivals as the true merchants of austerity.

"Ryan also argued with a straight face on [Meet The Press] that the Ryan-Romney plan would avert the very European-style austerity on which it's modeled!" Obama strategist David Axelrod tweeted recently.

Resolving the tension between these two seemingly incompatible arguments -- more fiscally responsible, less austere -- turns out to be more difficult than adding up numbers on a ledger. But it provides an instructive look at what the candidates and parties stand for this election cycle.

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Deficit

Who Really Caused The Deficit? (CHART)

Sahil Kapur | May 15, 2012, 5:17AM

President Barack Obama and Mitt Romney

This week Republicans will attempt to move the national political conversation back to a familiar theme with a series of attacks on President Obama over the national debt. The GOP released a web video Monday bashing his "broken promises" on the deficit and previewed a major speech Tuesday by likely presidential nominee Mitt Romney on the issue.

Divorced from context, the numbers are uncomfortable for the President and are ready-made for pointed partisan attacks. Under Obama's watch the national debt has risen from roughly $10 trillion to $15 trillion, a record high. But to what extent are his decisions while in office to blame? The answer: very little. The vast bulk of the debt is the result of policies enacted during the Bush administration coupled with automatic increases in federal spending and decreases in tax revenue triggered by the economic downturn.

Those are economic facts of life known to experts but that often gets lost in the political debate (and which Obama's opponents are willing to obscure). So with the GOP's push to return the deficit to the center of the political conversation, here's quick reminder of the basic facts that you may have forgotten.

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Taxes

Top Dem Explains Plan To Break GOP Anti-Tax Absolutism

Brian Beutler | May 8, 2012, 10:37AM

Rep. Chris Van Hollen (D-MD)

Breaking Republicans' anti-tax absolutism is key to understanding just about everything Democrats have been doing for months now, both in Washington and on the campaign trail. It's the strategic underpinning of the Buffett Rule and the surtax on million-dollar earners; it's the purpose of the so-called "sequester" -- the deep cuts to defense and discretionary spending that will kick in next year if Congress doesn't pass a substantial deficit-reduction plan -- in the debt-limit deal, and it explains Democrats' reluctance to unwind the sequester until Republicans agree to significant new revenues.

So far it hasn't worked, and most elected officials don't expect any movement on the issue until after the election.

Even if President Obama wins re-election, though, what's to stop Republicans on Capitol Hill from linking arms and blocking any tax revenues?

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Chuck Schumer

Dems Squeeze GOP Over Taxing Wealthy To Pay For Affordable Student Loans

Brian Beutler | April 30, 2012, 5:56AM

Sen. Chuck Schumer (D-NY)

Now that the GOP has dropped its politically untenable objection to extending low-interest student loans, the legislative battle has entered a familiar realm, just weeks ahead of a scheduled rate hike: How should Congress pay for keeping the loans cheap?

It's familiar terrain for observers of the payroll tax fight, which ended with both parties simply agreeing not to pay for the holiday at all. But before they reached that point, the parties bickered over various financing schemes, while pushing ideologically opposed offsets. Republicans wanted cuts to domestic support programs, Democrats wanted to raise income taxes on income over $1 million a year.

This time around, though, the Democrats' opening bid is different -- and they argue that it reflects their willingness to set politics aside and extend the loan rates, currently set to double at the end of June, without a fight, while Republicans try use the coming cliff to eat away at President Obama's health care law.

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Debt

Top Congress Scholar Says Country Could Easily Fall Off Fiscal Cliff In January

Brian Beutler | April 25, 2012, 5:57AM

Protestors demand "Cut Spending Now" near the Capitol building in Washington DC

A renowned congressional analyst thinks there's a good chance that the country could fall off a fiscal cliff on Jan. 1, no matter who wins this November.

At an American Enterprise Institute event on the future of Medicare Tuesday, AEI scholar Norm Ornstein outlined a scenario in which Congress falls on its face this winter, and fails to address the expiring Bush tax cuts and payroll tax holiday, automatic sequestration spending cuts, lapse of federal borrowing authority and other spending and tax provisions set to contract the budget automatically at the end of the year.

"Most of the cognoscenti in Washington say, Of course they'll reach an agreement because they can't not reach an agreement,'" Ornstein said. "Get inside the belly of the beast and you realize these days they can not reach an agreement."

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Buffett Rule

How Washington Forgot Where The 'Buffett Rule' Came From

Brian Beutler | April 13, 2012, 5:08AM

It's been nearly seven months since President Obama introduced the Buffett Rule. He first described it at the White House last September, shortly after the GOP's persistent refusal to take any new tax revenue from wealthy Americans sank his bid to pass major deficit-reduction legislation and nearly turned the standoff over raising the debt ceiling into a full-blown economic calamity.

At the time the "rule" was only a principle: People who make over $1 million a year should pay at least as high an effective tax rate as middle-class Americans. In context, it served a clear purpose: With the parties poised for a major, unavoidable conflict over the budget and national priorities, Republicans needed to be broken of their anti-tax orthodoxy. The Buffett Rule was a politically bulletproof cudgel, and popular with President Obama's base to boot. It wouldn't on its own solve the country's long-run budget problems, but that wasn't the point -- this was a small piece of a broader package of fiscal policies Obama had introduced. But it served a huge symbolic purpose. The real point was to pull back the veil on the GOP's true vision for the country, force them to deal sensibly on key national priorities. And if Democrats reaped a political bounty in the process, all the better.

Fast forward to this week. Americans are paying their taxes, Mitt Romney -- a poster child for tax inequity -- has all but cinched the GOP presidential nomination, Obama has renewed his push for the Buffett Rule and the Senate will hold a vote on a Buffett Rule bill next week. The synergy is clear, and intentional -- part of a careful political strategy. But the upshot thus far isn't that Republicans are retreating from their anti-tax absolutism (they're not) but that high-profile members of the commentariat have forgotten all of this history.

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Barack Obama

White House Ramps Up Push For 'Buffett Rule' With Romney Nomination Looming

Brian Beutler | April 10, 2012, 6:06AM

President Barack Obama during his 2012 "State of the Union" address

Ahead of a Senate vote next week to put members on record supporting or opposing the so-called "Buffett Rule," the White House is rolling out a public campaign to tout the notion that people who make more than $1 million a year should pay a bigger share of their income in taxes than middle-class Americans.

The subtext is heavily political. On Monday, the Obama campaign hosted a conference call to pressure likely GOP nominee Mitt Romney to release years of tax returns after Romney revealed that his own effective tax rate last year was below 15 percent. And on Tuesday, Obama himself will travel to Florida to publicly push the Buffett Rule.

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Barack Obama

How Congress Helps Republicans, But Not Democrats, Weather Bad Economies (Charts)

Brian Beutler | March 14, 2012, 5:43AM

If President Obama's economic recovery continues apace, and his re-election prospects grow along with it, it won't be because Congress went out of its way to help. As we noted Tuesday, Obama's economy has benefitted from less of Washington's largesse than did crypto-Keynesian Ronald Reagan's. But this is actually part of a broader pattern. Recently, Republican presidents have benefited from accommodating Congress during times of economic weakness, while Democratic Presidents Clinton and Obama watched Congress suddenly grow stingy under their watch.

That pattern has significant implications for how these presidents weathered economic downturns politically, and to a great extent explains the political troubles Obama's faced in his first term.

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Mitt Romney

OOPS! Romney Lets Slip An Uncomfortable Truth About His Tax Plan

Brian Beutler | March 7, 2012, 10:06AM

Mitt Romney

On CNBC Wednesday morning, Mitt Romney was given a breather from political questions about his appeal to GOP primary voters and allowed to discuss substance. When it was all over, he probably wished it had been the other way around.

Brushing back a question about independent analyses, which conclude his plan will blow a huge hole in the budget, Romney accidentally hinted at a key fact about his fiscal policy: he left out all the hard stuff.

"I think it's interesting for the groups to try and score it because it can't be scored because those kind of details have to be worked out with Congress and we have a wide array of options," Romney said.

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Mitt Romney

New Romney Plan Lowers Taxes Further On Rich, Raises On Poor (CHART)

Brian Beutler | March 1, 2012, 5:14PM

Mitt Romney

When Mitt Romney unveiled his revised tax and debt plan last week, his camp sold it as a bid to preserve fairness to the middle class.

He proposed an across the board 20 percent cut to everybody's current rates, and to make up the lost revenue by limiting deductions, credits and other tax benefits for wealthy Americans. But he declined to specify exactly how he'd broaden the tax base. And a new analysis by the Tax Policy Center shows that without those details, his proposed cuts would actually be more regressive than his first plan.

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Mitt Romney

D'oh! Debt Hawks Fear Most GOP Tax Plans Will Increase Deficit

Brian Beutler | February 23, 2012, 1:48PM

A key test for the political establishment and the media this campaign cycle will be whether they accurately explain the Presidential candidates' budget plans to voters, or whether they allow the candidates to spin their way out of the severe implications of their own proposals. The election will hinge to a large extent on the two parties' visions for the role of the federal government and how to pay for it, and keeping the taxing and spending implication of those visions clear is the key to helping voters make informed decisions at the polls.

An event hosted Thursday morning by the fiscal discipline hawks at the Center for a Responsible Federal Budget offered this corner of the establishment an early critique of the GOP candidates' tax and spending plans -- all of which drew mixed reviews or worse.

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Mitt Romney

The GOP's Real Tax Cut Goal Has Nothing To Do With The Middle Class (CHART)

Brian Beutler | February 23, 2012, 5:50AM

Republican presidential candidate Mitt Romney speaks at the Livonia and Greater Farmington Hills Area Chambers of Commerce luncheon at the Farmington Hills Manor in Farmington Hills, Michigan, Thursday, February 16, 2012. (Patricia Beck/Detroit Free Press/MCT)

You'd think that with the economy growing, and indeed accelerating in its growth, the GOP would be setting itself up to claim all the credit come November -- rather than reluctantly embracing President Obama's call for a payroll tax cut, while talking down its efficacy as a tonic for the job market.

Instead they're obstinately digging in. And with all of the party's presidential hopefuls lukewarm on the payroll tax cut and leapfrogging each other with plans to cut taxes for wealthy Americans alone, Republicans are inadvertently clarifying for voters what they know to be unpopular economic policies.

"Let's be honest, this is an economic relief package, not a bill that's going to grow the economy and create jobs," said House Speaker John Boehner last week in a statement ahead of the passage of the payroll tax cut deal.

The package itself won a modest majority of Republican votes in the House and a significant minority of Republican votes in the Senate. But both stand in complete agreement with the GOP presidential field on the need to enact large, permanent tax cuts for the highest earners in the country. This is what Mitt Romney refers to as pro-growth tax policy. So to give you a clearer sense of what the GOP would have rather done than renew the payroll tax cut, here's a graphical breakdown.

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Paul Ryan

Ryan: Even If Obama Wins We Don't Need To Change Our Tax Philosophy

Brian Beutler | February 16, 2012, 11:06AM

Sen. Ron Wyden (D-OR), and Rep. Paul Ryan (R-WI)

The consensus among GOP leaders, and really leaders of both parties, is that the two biggest issues dividing the parties -- how much wealthy Americans should pay in taxes, and how the health care safety net should be structured -- will be decided by the elections in November.

The implication is that if Republicans win convincingly, the country will have provided them a mandate to further reduce taxes and roll back Medicare, Medicaid and the health care law.

But what happens if President Obama and the Democrats walk away with the prize? Will Republicans agree to increase, fairly significantly, the amount of money flowing into the Treasury?

Er, um. Maybe.

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Payroll Tax Cut

Paul Ryan: Yes, Payroll Tax Fight Hurt GOP

Brian Beutler | February 16, 2012, 10:15AM

Rep. Paul Ryan (R-WI) speaks during a press conference on the debt ceiling in Washington, D.C. on August 1, 2011

With the ink drying on a final deal, one of the highest profile Republicans in Congress said the December and February fights over extending the payroll tax cut and other expiring provisions through the end of the year have hurt Republicans -- at least in the short term.

"It's a tough issue because they had to compromise... But yeah, I think the payroll tax deal, from a political perspective, certainly caused damage because it muddled the differences [between the parties," House Budget Committee Chairman Paul Ryan (R-WI) told reporters at a breakfast roundtable hosted by the Christian Science Monitor. "It got us down into a skirmish, where the differences got muddled, which is I think what the President loves."

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Payroll Tax Cut

Dems Plot Payroll Tax Cut End Game

Brian Beutler | February 13, 2012, 5:29PM

Sen. Harry Reid (D-NV)

After a few hours of thought, Democrats have decided the GOP's blink on the payroll tax cut is an unvarnished good, not some devious trick.

Republicans have all but agreed to renew the payroll tax cut through the end of the year without paying for it -- a huge tactical swing for them. But they're still insisting that the other expiring measures -- extended unemployment insurance (UI), and Medicare physician reimbursements (the "doc fix") -- are somehow offset with cuts elsewhere.

Having taken the most politically important, and most costly item off the table, are Republicans in the driver's seat in negotiations over extending the other two items? Not necessarily.

A senior Senate Dem aide explains how Democrats might well proceed from here.

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Payroll Tax Cut

Why The GOP's Payroll Tax Cut Cave Is An Even Bigger Deal Than You Think

Brian Beutler | February 13, 2012, 4:40PM

House Speaker John Boehner (R-OH) and President Barack Obama

The GOP's accession to reality on the payroll tax cut is being cast as a key victory for Democrats and President Obama. Republicans caved, the payroll tax will almost certainly be renewed, and the economy won't take a tough hit just as the recovery's beginning to accelerate.

But it also reveals a flaw -- a potentially huge flaw -- in the conservative movement's generational strategy to roll back the federal safety net.

These might sound like two wildly disparate issues, but they're actually variations on a years-long theme. And the outcome of the payroll tax debacle bodes poorly for the GOP on the rest of their long-run goals.

Here's why.

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Budget

Obama To Draw Contrast With GOP In Budget

Brian Beutler | February 13, 2012, 5:43AM

President Barack Obama

Though required by law, White House budgets are largely political documents that tend to become more and more political as reelection time gets closer and closer.

This year's will technically be no different -- but the long-term stakes will be much higher than they usually are and clarifying that fact for voters will be key to President Obama's appeal in 2012.

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Paul Ryan

Are Republicans About To Commit Medicare Suicide?

Brian Beutler | February 7, 2012, 5:40AM

Rep. Paul Ryan (R-WI) speaks during a press conference on the debt ceiling in Washington, D.C. on August 1, 2011

It's shaping up to be spring 2011 redux. Just under a year ago, Republicans -- euphoric after a midterm election landslide, and overzealous in their interpretation of their mandate -- passed a budget that called for phasing out Medicare over the coming years and replacing it with a subsidized private insurance system for newly eligible seniors.

The backlash was ugly. But Republicans seem to have forgotten how poisonous that vote really was, and remains...because they're poised to do it again. This time they're signaling they'll move ahead, with a modified plan -- one that, though less radical, would still fundamentally remake and roll back one of the country's most popular and enduring safety net programs.

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Defense Spending

Bait And Switch: GOP Leaders Renege On Debt Limit Deal Defense Cuts

Brian Beutler | February 3, 2012, 5:57AM

House Speaker John Boehner with House Majority Leader Eric Cantor in the foreground.

Republican leaders in Congress have all but reneged on a key agreement they reached with the White House last summer rather than reconsider their unwavering stance against new tax revenue.

Relations between the Obama administration and the congressional GOP were already just about as bad as can be. But even so, this sets a precedent future Congresses and White Houses will remember when partisan mismatches force them to strike deals and govern.

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Defense Spending

Top Defense Dem: GOP Must Blink First To Avoid Pentagon Cuts

Brian Beutler | January 26, 2012, 11:59AM

Despite a brewing panic among Congressional Republicans (and some Democrats) over automatic, across-the-board defense cuts set to kick in on January 1, 2013, the top Democrat on the Senate Armed Services Committee says those cuts must stand unless and until Republicans relent on their anti-tax absolutism, and agree on a balanced deficit reduction package that includes higher revenue.

"The purpose of the sequester is to force us to act to avoid the sequester," Sen. Carl Levin (D-MI) told reporters at a Christian Science Monitor roundtable. "It's like a nuclear weapon -- it's totally useless; it can't be used except to accomplish some other goal than its use. It's used to deter."

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Taxes

Senate Democrats Plan To Put Republicans On The Wrong Side Of The Middle Class

Brian Beutler | January 25, 2012, 3:11PM

Senate Democrats are preparing an aggressive legislative agenda to complement the vision President Obama outlined in his State of the Union Address. The goal is to test the idea that the public supports an agenda of aggressive federal action on behalf of the middle class, and that Republicans are locked in a pattern of reactionary opposition, even to popular policies.

The push is premised on the notion that the country has turned the corner on the fights over deficits and the size of government, and that keeping issues of equity and opportunity for the middle class at the center of the national debate will redound to Democrats' political benefit, either by breaking the GOP or by putting them on the wrong side of public opinion.

But in an extremely consequential election year, when consensus becomes an endangered species on Capitol Hill, it will take a groundswell of political pressure to force either party to work with the other on a substantive agenda. So expect the Dems to hawk these issues relentlessly.

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Eric Cantor

Cantor: Health Care And Tax Fights Will Be Decided By The Election

Brian Beutler | January 23, 2012, 3:51PM

House Majority Leader Eric Cantor (R-VA) urges the Senate to vote on the house-passed jobs bill during a news conference on Capitol Hill in Washington, D.C. on October 27, 2011.

At a briefing with a handful of reporters in his Capitol suite Monday afternoon, House Majority Leader Eric Cantor outlined the coming year on Capitol Hill -- one he said would be marked by increased oversight of the Obama administration; an ongoing debate between the parties about how best to grow the economy; and what he called a bipartisan effort to prevent automatic cuts to defense spending from kicking in at the end of the year.

But the two issues that have most divided the parties since President Obama took office -- the two most consequential pieces of the budget and the U.S. economy -- will most likely be decided by the election.

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Rick Santorum

CHART: Santorum Calls For Tiny (Huge!) Tax Cuts For The Poor (Rich)

Brian Beutler | January 19, 2012, 3:50PM

The Tax Policy Center in DC has released numbers Rick Santorum's tax plan -- the latest, and perhaps final, in a series of analyses of the leading GOP contenders' tax plans.

It's a variation on the theme underlying all of the Republicans' tax proposals -- its impact on the middle class is trivial compared to the massive tax cut it proposes for the wealthiest Americans.

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Mitt Romney

Finding The Real Deal On Romney's Offshore Investments

Brian Beutler | January 19, 2012, 2:59PM

Mitt Romney and his wife, Ann.

On Tuesday, Mitt Romney finally acknowledged what we've long suspected: that, despite earning millions of dollars a year, his tax rate is approximately 15 percent -- the same as it would be if he were a teacher earning $50,000 a year.

The disclosure touched off a flurry of news stories -- some about the rigged nature of the U.S. tax code, most about how this fact would play in the primary and general elections. Then on Wednesday ABC News broke another story. Romney, it turns out, has a lot of money invested in offshore funds -- the sort of funds you used to hear about years ago when wealthy people, foreign investors, private pensions and others would invest and shelter their money.

The timing of the ABC story couldn't have been better for those hoping to create a hazy sense that Romney's some kind of tax avoider. But they're largely two different things.

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Henry Waxman

Top Democrat Says GOP Will Have To Budge Big Time in Payroll Tax Fight

Brian Beutler | January 18, 2012, 9:51AM

A key Democrat tasked with helping to negotiate a full-year extension of the payroll tax cut, unemployment benefits, and Medicare physician reimbursements says Republicans will have to move significantly off their December demands or all three will lapse.

"We want to extend the middle class tax cut, we want to extend unemployment insurance, and we want to keep our promise to Medicare beneficiaries that we're going to pay for their doctors, so they can have access to their physicians," Rep. Henry Waxman (D-CA) told me in a brief interview off the House floor Tuesday. "But I'm not going to support something to pay for that by cutting Medicare or cutting the middle class. We can reach an agreement on these things, but the Republicans are going to have to move."

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Mitt Romney

CHART: Romney Plan Raises Taxes On Lower-Middle Class, Cuts Taxes On Wealthy

Brian Beutler | January 5, 2012, 3:31PM

Mitt Romney's tax plan is more complex than those of his current and erstwhile primary competitors. But in broad effect it accomplishes the conservative goal of dramatically lowering taxes on the wealthy at the expense of the lower and middle classes.

The Urban-Brookings Tax Policy Center crunched the numbers -- part of a series of analyses the group has done of the GOP candidates' tax proposals -- and found that the plan constitutes a major tax cut for wealthy Americans. But compared to today's rates, Romney proposes effective tax increases for people making less than $40,000.

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Mitt Romney

Here's What Romney's Unreleased Tax Returns Almost Certainly Hide

Brian Beutler | January 5, 2012, 5:32AM

Mitt Romney still says he's unlikely to publicly release his tax information, even if he clinches the Republican presidential nomination, and Democrats have a pretty good idea why.

Romney is a privileged poster child for the "Buffett Rule" -- President Obama's principle that the tax code should make it impossible for a person of great wealth to pay a lower share of their income in taxes than ordinary people. The DNC knows it, policy wonks know it, Romney certainly knows it. But the reasons why are technical and illustrate just how different Romney is from the vast majority of Americans who will cast votes for him -- in either the GOP primary or the general election.

One tax expert told TPM of "fairly sophisticated tax strategies" that would be "not available to ordinary tax payers." A technique that puts you in a position that's "like having an unlimited 401k account" sounds very attractive. But maybe not if you're running for office, for Pete's sake.

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2012

Why The Policy Battles Of 2011 Won't Be Settled Until After The 2012 Elections

Brian Beutler | December 29, 2011, 2:25PM

House Speaker John Boehner (R-OH) and President Barack Obama

When President Obama and the GOP's primary contenders talk up the 2012 election as a choice for voters between two visions for the country's future, it's only about half hyperbole.

We'll see a prelude of this fact in the months between now and November both on the campaign trail and on Capitol Hill as politicians club each other with their past votes and statements on taxes, Medicare, Social Security, and other potent issues. But it's not just rhetoric.

To an unappreciated extent, the legislative whipsawing in 2011 has set the country and the parties up for a major reckoning about the role and size of government at the end of next year. And the outcome of the election will help determine which side of the argument wins.

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Government Shutdown

House GOP Pushes The Envelope In Shutdown, Payroll Tax Fight

Brian Beutler | December 15, 2011, 10:40AM

John Boehner

Late Wednesday night -- in the early hours of Thursday morning, really -- House Republicans decided to go all in on the latest government shutdown fight.

Testing the limits of compliance with their own rule that legislation be posted online for three days before a final vote, GOP leaders, over White House objections, unveiled major appropriations legislation that must pass by Friday at the stroke of midnight if Congress is to avoid a government shutdown.

The move raises one key question for each party. Can Republicans pass these appropriations on their own, if Democrats stick to their guns and withhold their votes. And, if the GOP succeeds, will Senate Democrats and President Obama hold their ground and block the legislation until a key policy issues are addressed, and the parties reach agreement on the separate issue of how to extend the current payroll tax cut into next year.

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Government Shutdown

Dems Consider Dropping Demands As Republicans Risk A Shutdown

Brian Beutler | December 14, 2011, 4:59PM

Sen. Harry Reid (D-NV) and Sen. Charles Schumer (D-NY)

If it weren't for the filibuster, Democrats would have the GOP neatly over a barrel. But Republicans believe they've regained the upper hand -- and two developments suggest they're right.

Senate Democrats are now considering dropping their demand that a payroll tax holiday for workers be offset by imposing a small surtax on millionaires, according to Democratic aides -- resigning themselves to the fact that Republicans won't lift their filibuster if the surtax stands.

That'd leave a substantial funding hole in the bill, and it's unclear what would fill it. One option being considered is having mortgage giants Fannie Mae and Freddie Mac charge lenders higher fees -- a version of this measure is already in the House-passed payroll tax cut bill.

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Payroll Tax Cut

GOP Pushes Dems To Accept Medicare Cuts For Current Retirees

Brian Beutler | December 14, 2011, 3:35PM

U.S. Speaker of the House John Boehner (R-Ohio) speaks to the press during his weekly press conference on Capitol Hill in Washington, D.C. on December 1, 2011.

Senate Democrats are under pressure to adopt the payroll tax cut bill House Republicans passed last night -- or something very close to it. President Obama has threatened to veto it, and Senate Majority Leader Harry Reid (D-NV) has declared it dead on arrival in his chamber.

But as explained here and here the issue has now become tied up with funding the government for the rest of the fiscal year. If appropriations legislation doesn't pass by Friday night, the government will shut down. And even if Congress manages to avoid that mishap, the current payroll tax cut -- along with extended unemployment benefits and a patch to prevent Medicare doctors from experiencing a big pay cut -- all expire on January 1. Hamstrung by the GOP's filibuster powers, Dems can't pass an alternative version without GOP help, and so the heat is on them to cave.

Despite all that, here's one reason Democrats might hold firm:

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Payroll Tax Cut

House GOP Passes Payroll Tax Cut Bill Obama Has Threatened To Veto

Brian Beutler | December 13, 2011, 6:53PM

Speaker John Boehner (R-OH)

Despite loud warnings from Senate Democrats and a veto threat from President Obama because of poison pills within the text, House Republicans Tuesday passed legislation to renew a 2 percent payroll tax holiday and extended unemployment benefits of one more year.

The bill passed 234 - 193, with 10 Democrats joining with the Republicans and 14 Republicans pitching in with the Dems.

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Payroll Tax Cut

Dems To GOP: Deal Fairly On Payroll Tax Or Shut Down The Government

Brian Beutler | December 13, 2011, 1:05PM

Senate Democrats and the White House are executing a strategy to prevent House Republicans from jamming them with legislation to extend the current payroll tax cut that's been larded up with GOP goodies, according to White House and Congressional aides. For all practical purposes, Senate Majority Leader Harry Reid has linked the payroll tax issue -- and other key end-of-the-year issues -- with legislation to fund the government for the rest of the fiscal year. And he's presenting Republicans with a choice: deal in good faith on the payroll tax issue, or trigger a government shutdown.

Democrats were worried that House Republicans would close ranks around a version of a payroll holiday that included both must-pass items (such as an extension of unemployment insurance and a patch to prevent Medicare physicians from experiencing a severe pay cut on the first of the year) and GOP poison pills (including a provision forcing the Obama administration to give thumbs-up or thumbs-down to the Keystone XL oil pipeline within 60 days)...then pass it and skip town, leaving Democrats little choice but to swallow their bill whole.

That's exactly the strategy they tried to execute -- and until late Monday it looked like it might work.

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Newt Gingrich

CHART OF THE DAY: Gingrich Tax Plan Would Codify Lower Taxes On Rich Than On Middle Class

Brian Beutler | December 13, 2011, 5:04AM

Newt Gingrich addresses a tea party rally in Staten Island, NY on December 3, 2011.

On Monday, the Tax Policy Center published an analysis of Newt Gingrich's plan to overhaul the tax code -- the latest in a series of of analyses of GOP presidential candidate tax proposals. And like all the plans that came before it, Gingrich's constitutes a massive tax cut for the rich. Indeed, no matter how you stack the numbers, Gingrich wants a tax system that permanently holds tax rates on the highest earners lower than tax rates on the middle class.

There are a lot of ways to parse the data. Gingrich proposes creating an alternative tax system that would significantly flatten the code, while keeping the current one in place as an option. So you can run the numbers assuming everybody jumps into the new system, or you can run them assuming that the only people who hop into the new system are people who would benefit financially as a result. And you can compare Gingrich's plan to current tax policy -- including the Bush tax cuts and other temporary tax policy -- or you can compare it to current law, which assumes all of these policies will expire in the next year, and go up on just about everyone.

To be as fair as possible, let's take Gingrich at his word that he would extend the Bush tax cuts for those staying in the current system, and that the only people who would opt into the new system are those who would pay lower taxes as a result.

Here's what happens to people's average federal tax burden as a result.

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Payroll Tax Cut

GOP's Keystone Pipeline Gambit Distracts From Other Measures

Brian Beutler | December 9, 2011, 1:28PM

House Speaker John Boehner (R-OH) and President Barack Obama

In a bid to consolidate support within their caucus -- and to flip the bird to President Obama -- House Republicans have tacked a provision on to their payroll tax cut bill that would force the administration to decide whether to allow construction of the Keystone XL pipeline within 60 days, instead of after the election next year as the administration currently plans.

Though controversial outside of Washington, the pipeline has bipartisan support in Washington, and Republicans -- itching for this fight -- are banking on the idea that some Democrats will cross the aisle and put Senate Dems and Obama in a tough spot.

And to some extent they've been successful. Obama strongly suggested he'd veto the bill over the provision, Senate Majority Leader Harry Reid has called it dead on arrival, and many in the media have painted the GOP's bill as providing Dems a choice between passing the payroll tax cut and blocking the Keystone pipeline.

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Chuck Schumer

Schumer: GOP Message Machine Can't Save Them From Tax Debacle

Brian Beutler | December 7, 2011, 2:26PM

Elaborating on a premise that should be familiar to TPM readers, Sen. Chuck Schumer (D-NY) told reporters Wednesday that the political terrain has shifted so much over the last several months that the GOP's playbook isn't working -- and it has them badly wrongfooted.

"You have to follow the broad movements underground that affect our politics," he said. "And it's happening. And they seem to be just stuck on the wrong side of issue after issue after issue. They're very good at messaging. They're very good, you know, they have some media people who just follow their line....but the weight of the issues and the place where America is at is so overwhelming that's no longer enough to sustain them."

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Patty Murray

Patty Murray: The One Percent Aren't 'Job Creators'

Brian Beutler | December 7, 2011, 10:33AM

Super Committee Members John Kerry and Patty Murray

Former Super Committee co-chair and head of Senate Democrats' 2012 campaign effort Patty Murray will take on the GOP myth that the wealthiest Americans are "job creators" -- and therefore must be protected from higher marginal tax rates.

In prepared floor remarks sent my way, Murray will argue that the GOP has this exactly backwards, and that middle class workers need more money in their pockets -- not the highest earners.

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Nancy Pelosi

Nancy Pelosi Games Out The Long Fight Over Medicare And The Rest Of The Safety Net

Brian Beutler | December 7, 2011, 4:45AM

House Minority Leader Nancy Pelosi

Eight months is a long time in politics, but it will be eight months ago next week that House Republicans voted overwhelmingly for a budget that envisioned a massively scaled-down social safety net -- a smaller, privatized health care system for old people, to replace traditional Medicare; Medicaid financially constrained, and handed over to state governments; cuts to various other support programs that benefit the poor, the young, and the elderly.

That didn't sit well with voters. And in the months that followed, Republicans tried to contain the fallout by making federal deficits a central political issue while forcing Democrats to agree to real cuts to these programs -- all while refusing themselves to raise taxes, even on the very wealthiest Americans.

This too didn't go according to plan. The GOP upheld its vow not to raise taxes; Democrats insisted new tax revenue was a criterion for cutting benefits; and Medicare, Medicaid, and Social Security avoided the scalpel.

At least for now.

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Payroll Tax Cut

Collins, McCaskill Push Millionaire Surtax That Exempts 'Small Business'

Brian Beutler | December 6, 2011, 10:27AM

Sen. Susan Collins (R - ME), left, and Claire McCaskill (D - MO), stand together during a presidential signing ceremony for the Improper Payments Elimination and Recovery Act at the White House in Washington, D.C. on July 22, 2010.

Two senators, one Dem one Republican, are trying to break the GOP objection to raising taxes on millionaires to fund job creation measures. If they're successful, it will become the key to passing President Obama's payroll tax cut proposal, and driving a wedge between powerful anti-tax activists and the Republican party. But if Republicans object it will expose the hollow nature of their overwhelming opposition to taxing the affluent.

When Republicans object to small tax increases on millionaires they claim Democrats are proposing to raise taxes on "small businesses" or "job creators."

This is basically a distraction. Some businesses are organized as pass-through entities, in which federal taxes are paid by the owner as individual income taxes, including a hypothetical surtax on millionaires. But this is a small share of filers, and some of these filers are major, privately held companies -- not small businesses.

To strip Republicans of this objection, Sen. Claire McCaskill (D-MO) and Sen. Susan Collins (R-ME) are proposing to exempt these entities from the millionaire's surtax, and put the remaining revenue to paying for President Obama's payroll tax holiday.

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Payroll Tax Cut

Dems Drop Details Of Payroll Tax Cut While GOP Signals Early Opposition

Brian Beutler | December 5, 2011, 1:04PM

Senate Majority Leader Harry Reid (D-NV)

Democratic sources confirm that Harry Reid will try to win GOP support for a new payroll tax holiday by shrinking the size of the overall cut, and offering Republicans a few concessions that they've been pushing for both publicly and behind the scenes.

But their proposal will be partially paid for by a small, temporary income surtax on millionaires, and that will be a tough sell with Republicans, according to a top Republican aide, as the GOP overwhelmingly opposes raising taxes on high-income earners.

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