Showdown Over Tax Cuts

In case you were wondering if there was something more to the tax cut showdown in the Senate today than a set of competing spin points on the campaign trail, I think this [1] is probably the tactical objective:

Wednesday’s development places the onus of avoiding the full expiration of the Bush tax cuts on House Republicans. They are expected to pass legislation next week to extend all of the Bush tax cuts — but the Senate has already rejected that proposition. That leaves the Senate Democrats’ bill as the only viable vehicle for preventing everyone’s taxes from increasing next year.

Republicans will object to House adoption of the Senate bill on technical grounds. It faces what’s known as a blue-slip problem, because the Constitution requires revenue-raising measures to originate in the House of Representatives. But the blue-slip problem is only an obstacle if House Republicans insist on making it one — and Democrats are confident voters will be receptive to the argument that the GOP is standing in the way of middle-income tax cuts until wealthy Americans get a tax cut too.

To that end, the White House announced President Obama’s strong support for the Senate bill. “All sides agree on the need to extend the tax cuts for the middle class,” reads a statement of administration policy. “[T]his legislation reflects that consensus, and should not be held hostage while debating the merits of another tax cut for the wealthy.”

Now, they will object on technical grounds of course. In fact, they'll exhume the corpse of Robert Byrd and Henry Clay to prove their point if they have to. But when all is said and done, the Senate vote will stand as the one that passed when we get in to the nitty gritty negotiations of the lame duck session. As everyone faces the possibility of all the tax cuts expiring, this will be hovering out there like an angel of salvation if they want to grab it.

Upshot: don't get your hopes up. But, as they say, it could happen.