Thread: Joe Biden's in
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Old 06-24-2019, 02:03 PM
RTFirefly is offline
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Join Date: Apr 1999
Location: Maryland
Posts: 39,658
How Uncle Joe's mad negotiating skillz gave away the expiration of the Bush tax cuts.

I remember this from the time (end of 2012), other than the inside stuff of course. All the Dems had to do was let the Bush tax cuts expire, and then they'd be in a position of strength, in a position to offer their own set of tax cuts, focused on the middle class and the poor, but putting the rich pretty much back where they were in 2000. Plenty of outside observers saw this; I can't take credit for any special insights.

Unsurprisingly, Harry Reid saw it too:
The extension meant that the tax cuts were now expiring in 2012, and in order to repeal all of them — to go over what the media began calling the “fiscal cliff” — all Congress had to do was nothing. That, Harry Reid told me in an interview for my new book, was precisely his plan. “I wanted to go over the cliff,” said Reid, the Senate majority leader at the time. “I thought that would have been the best thing to do because the conversation would not have been about raising taxes, which it became, it would have been about lowering taxes.”

In other words, let all the rates go up, and then bargain with Republicans to reduce taxes just for the middle class and the poor.
And somehow the Democrats blew it again. What happened?
McConnell reached out directly to Biden, calling him on the phone and explaining that Reid was refusing to be reasonable. Over the course of the day, McConnell and Biden struck a deal. “Biden gave Republicans everything they wanted in exchange for fixing the fiscal cliff problem,” the GOP operative recalled.
Years later, Reid still regrets how it went down. “If we’d have gone over the cliff, we’d have had resources to do a lot of good things in the country — infrastructure development — but it didn’t work out that way,” Reid said. Letting all the tax rates go back to pre-Bush levels would have yielded the Treasury around $3 trillion over 10 years. Instead, the deal ultimately brought in around $600 billion (or would have, if taxes hadn’t been slashed again by Republicans in 2018). Without the deal, taxes on dividend payments to the rich would have been set at 39.6 percent. Under the terms of the deal, they would be set at 20 percent, meaning that the super-wealthy would be paying lower tax rates on their passive dividend income than some working people would pay on their salaries.

I asked Reid how Biden defended the strategy that day.

“It wasn’t one that I agreed with,” he replied politely, “so you’d have to ask some of his people.”

His people declined to comment.
I wondered at the time how the Dems managed to fuck that one up. Didn't wonder about it indefinitely, because of course the GOP's response to the Dems' caving was to force further fiscal emergencies, like the debt ceiling crisis in the summer of 2013.