Winning at the tax hike game

“Tax debate causes rifts among Democrats

By Peter Wallsten, Published: May 13

While Republican tensions over tackling the national debt have been on public display for days, Democrats have also been squabbling with one another, though largely out of view.

At issue for Democrats is whether the party risks going overboard in its embrace of tax increases — a perilous proposition for lawmakers from political battlegrounds.

Those tensions erupted at a private meeting this week of a handful of key Democratic members.

Sen. Bill Nelson (D-Fla.), facing reelection next year, spoke up to oppose a plan being drafted by Senate Budget Committee Chairman Kent Conrad that would impose a new surtax on millionaires of about three percent on top of the higher tax rates they would face when the George W. Bush tax cuts expire next year, according to several people familiar with the exchange.

Nelson later explained through a spokesman that he was opposed to “double taxation,” even on the wealthy.

Another centrist on the budget committee, Sen. Mark Begich (D-Alaska), has also opposed the idea.

Several centrist Democrats have been voicing concern in private sessions that Conrad’s draft may be shifting too far to the left in order to placate liberals on the committee whose votes are needed to move the legislation, according to aides.

Republicans have been rallying around a House spending plan authored by Budget Committee Chairman Paul Ryan (R-Wis.), even as they’ve been sending mixed signals in recent days over a key provision calling for a deep overhaul of Medicare.

The Democratic-run Senate, meantime, has been unable — or unwilling — to lay out its alternative agenda.

The fracturing within the party illustrates the political dilemma facing Democrats as budget negotiations and the 2012 election cycle heat up simultaneously.

Democrats say they are committed to reducing the deficit, but they vehemently oppose many of the cuts spelled out by the House GOP. That means raising taxes — which could leave some Democrats vulnerable to the old tax-and-spend label that has long haunted the party in competitive elections. The big question roiling Democratic ranks: How much deficit reduction are they — and the voters — willing to accept in the form of higher taxes?

Republicans, urged on by their tea party base, say any tax increase is a non-starter — and the GOP is preparing to target centrist Democrats such as Nelson for their support of tax hikes.

“There are folks in both caucuses who have drawn lines in the sand,” said Sen. Chris Coons (D-Del.), a budget committee member. “Getting them to agree to get past that and to move forward with proposals that have everything on the table is quite challenging.”

Still, Coons said it was important for Senate Democrats to reach a consensus on a budget plan as a marker for bipartisan negotiations, to “show a competing vision.”

Many Democrats were uneasy about the recommendations last year from the bipartisan fiscal commission appointed by President Obama, which called for $4 trillion in deficit reduction over a decade. Obama laid out his own framework last month that he said would realize about $4 trillion over 12 years.”