Dems would let tax cuts expire to test Republicans, Sen. Murray says
Sen. Patty Murray said Monday that Democrats would let Bush-era tax cuts expire for all Americans rather than renew them for higher-income families.
Seattle Times Washington bureau
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WASHINGTON — Sen. Patty Murray said Monday that Democrats would let Bush-era tax cuts expire for all Americans rather than renew them for higher-income families, echoing a new get-tough stance adopted by her party leaders.
In a speech at the Brookings Institution in Washington, D.C., Murray tried to box in the Republicans to reveal just how hard they would fight to preserve lower taxes on the wealthy. The Democrats, she said, would go as far as to let the tax cuts lapse entirely Dec. 31 rather than give another break to the top 2 percent of earners.
"If Republicans won't work with us on a balanced approach, we are not going to get a deal," Murray said at Brookings. "If middle-class families start seeing more money coming out of their paychecks next year, are Republicans really going to stand up and fight for new tax cuts for the rich?"
The brinkmanship is a turnabout from 2010, when Murray and a majority of her fellow congressional Democrats voted to renew the tax cuts for all income levels for two more years.
The deal, brokered between President Obama and the GOP, angered liberals and fiscally conservative Democrats. Forty-four percent of House Democrats rejected it, among them Reps. Jim McDermott, of Seattle; Adam Smith, of Tacoma; and Jay Inslee, of Bainbridge Island, who resigned earlier this year to run for governor. McDermott said at the time that he would rather let all tax cuts expire than to renew them for higher earners.
Murray's salvo was the latest in an almost daily back-and-forth between top Republicans and Democrats over tax and spending cuts.
"They're ready and willing to go right off the fiscal cliff if they don't get their way," said Senate GOP Leader Mitch McConnell, of Kentucky. "Because they think it will make it likelier they'll get their way."
A host of temporary tax cuts — including lower income-tax rates and the 2 percent payroll-tax holiday — will expire at year's end without congressional action. In addition, about $100 billion in spending cuts will kick in next year, divided evenly among defense and nondefense programs.
A bipartisan congressional "supercommittee" co-led by Murray failed to agree last November on an alternative to the automatic spending cuts. Republicans are keen to protect the Pentagon's budget, while Democrats are insisting on new revenue to blunt the impact of cuts to social programs.
To do that, Democrats are attempting to "reset" the debate by raising the specter of letting taxes rise for all taxpayers. They have insisted all along on blunting the impact of spending cuts with new revenue. But only in recent weeks have Democratic leaders said they would risk — presumably temporarily — higher taxes on even struggling Americans to force the GOP to agree to raise taxes for families earning more than $250,000.
Murray, the No. 4 Senate Democrat, suggested the gambit would unshackle Republicans from an anti-tax increase pledge nearly all of them signed with anti-tax activist Grover Norquist. That's because once marginal income-tax rates revert to pre-Bush levels, every proposal to revive it by definition becomes a tax cut.
"We will have a new fiscal and political reality," Murray said.
The Senate and the House are scheduled to vote on extending the Bush cuts later this month.
Murray said she thinks a compromise can be reached, but only "as soon as Republicans decide to work with us."
A May report by the nonpartisan Congressional Budget Office (CBO) laid the fiscal choices in stark terms.
Allowing the higher taxes and spending reductions to take effect would likely sink the economy into a recession during the first half of 2013, although growth will pick up in the second half, the CBO said.
But it would make a huge dent in the federal deficit. The CBO estimates red ink would drop by $710 billion in 2013 alone, even after taking into account the impact from higher unemployment and reduced incomes.
Material from The Associated Press in included in this report.
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