Moving ahead with President Obama's jobs plan, the Senate Democratic leadership today announced that it hopes to have a vote this week. But Democrats have added a slight tweak, a new provision they say will pay for the package by adding a 5 percent "surcharge" on top of the income taxes for Americans making more than $1 million a year. The announcement added to speculation that the bill is more about positioning the GOP for blame on the economy than for trying to build common ground.
This plan is a sharpening of Obama's initial proposal, which originally targeted those making more than $200,000 and focused as much on closing tax loopholes as on raising tax rates. Senate Majority Leader Harry Reid has said that some in his caucus had concerns about the slew of "payfors"—congressional parlance for a provision to cover the cost of the bill—that Obama had originally proposed. Rather than debating complicated tax reforms or eliminating various tax breaks, the Democratic Party can focus on a simple, easy-to-understand concept: asking millionaires and billionaires to pay 5 percent more of their income. (This 5 percent change would take effect whether or not the Bush-era tax cuts expire or stay in place.) The proposal could help the Democratic Party keep together and make their pitch to the public, but it also may crystallize Republican opposition. Although Reid noted that polls show broad agreement with the idea in the public, Republican opposition in Congress to tax hikes has never been greater. Kevin Smith, a spokesman for House Speaker John Boehner, called it a "desperate gimmick floated to cover up divisions within the Democratic caucus."
This new idea has the fingerprints of New York Sen. Chuck Schumer all over it. Schumer, who represents parts of the country where $200,000 isn't seen as super-rich, has long advocated focusing on taxes for millionaires, often making the point that it adds a clear message for Democrats. On Wednesday, Schumer went even further, defending the $1 million threshold as the appropriate level for increased taxes. "In the eyes of many, it is hard to ask more of households that make more than $250,000 or $300,000 a year. Many of them are not rich in large parts of the country. That kind of income does not get you a big home, lots of vacations, or anything else that's associated with wealth in America," Schumer said, words that will likely get picked up by Republicans when Congress eventually debates the Bush-era tax cuts.
It could be that this is more like an opening bid, much as Democrats and Republicans drew their lines on positions during the debt ceiling fight this summer. But with a vote expected to happen soon, there isn't much time to haggle over the details.