The Times reports this morning that the Democrats on the Hill have hit on a clever way to try to raise rates on dollars earned above $250,000:
Senate Democrats — holding firm against extending tax cuts for the rich — are proposing a novel way to circumvent the Republican pledge not to vote for any tax increase: Allow all the tax cuts to expire Jan. 1, then vote on a tax cut for the middle class shortly thereafter.
In other words, all the cuts will naturally expire on Jan. 1, meaning that everyone's taxes will go up but without Congress taking a vote. Then, in a few days, Congress can vote to restore the lower, pre-Jan. 1 rate on all dollars earned up to $250,000 (dollars earned, not people; if you're one of my regulars you know why). That way, Obama gets his increase on higher revenues, but Congress didn't have to vote for a tax increase. In fact it will have voted for a tax cut!
It means, of course, that Republicans technically won't have to break their no-tax-increase pledge to Grover Norquist. But in the same Times article Norquist said the scheme "doesn't pass the laugh test." I'm not so sure.
The political point of all this jockeying is for each party to try to see to it that the other one is blamed if they can't cut a deal and everyone's taxes do go up on Jan. 1. With this plan, the Democrats are offering the Republicans a way not to have to vote for an increase. The article also notes that the Democrats are making a second big concession, on the capital gains rate for high earners. Obama previously wanted graduated rates up to nearly 45 percent, but they're now willing to settle on just 20 percent, only modestly hgher than the current 15 percent rate.
It seems to me that all this, provided it's communicated effectively, will allow the D's to say that the R's are the reason your taxes went up--we offered them a way to do this so they wouldn't even have to have a vote, for gosh sakes!
The walls are closing in on Norquist. But slowly. GOP Senator Tom Coburn had an interesting op-ed in the Times the other day aimed at breaking Norquist's hold on the party. The piece was about as close as you're gonna get to a good-faith argument from today's Republican Party, so it's worth a read on those grounds, but I think it's pretty wishful on Coburn's part, and it still sidesteps the question of which specific loopholes would be eliminated, a topic no one will discuss.
If Norquist's pledge could become a dead letter, there's a lot that wouldn't solve, but the two parties could actually start talking again. Bt I think the prospects are doubtful and everyone's taxes will go up, at least for a while.