Fiscal Cliff Minuet Turning Into A Frenzy Over Estate Taxes?

If you hear Miss McConnell in coming days lisping that this proposal or that proposal in the Fiscal "Cliff" Minuet is "unfair to the American people," he means it's unfair to rich white people, the only people Republicans care about or consider worth their attention. As we warned a few weeks ago, the Grand Bargain has come down to Republicans and their ConservaDem allies trying to get away with whatever they can on eliminating, or at least lowering, estate taxes for the super-rich (people with estates worth tens of millions, hundreds of millions and billions). McConnell can play the big shot on this issue because he knows the worst of the reactionary Democrats in the Senate-- Mary Landrieu, Mark Pryor, Max Baucus, Claire McCaskill, Ben Nelson, etc-- will back him up.

Conservative icon Winston Churchill may have noted that an estate tax provided "a certain corrective against the development of a race of idle rich," and robber baron Andrew Carnegie-- whose opposed ever other kind of tax-- may have argued for a steep and confiscatory tax on inheritance, claiming that "our legislators fail in their duty, if they do not exact a tremendous share," but today's shameless whores to the same aristocracy of wealth that America's founding fathers devised a system to keep at bay have no compunctions about soaking the middle class and working families on behalf of the criminal class that underwrites their own political careers. Normally you think that would be the domain of Republicans but both Clinton and Obama have been less than scrupulous about sticking up for the middle class and there are always a dozen Democratic senators who will betray normal working families as a matter of course.

A post-election poll for Americans for Tax Fairness found that by a margin of 58 to 32%, people support “increase[ing] the the estate tax, also called the inheritance tax, on estates of more than seven million dollars for a couple.” Obama is, as usual, aiming very low and asking for way too little. Even as much of a corporate shill as former Treasury secretary Robert Rubin, currently co-chairman of Goldman Sachs, thinks Obama should step up his proposal. “A substantial estate tax," explained this week, "can provide revenues at a time when our federal government badly needs additional revenues." The Obama proposal on the table that Miss McConnell is crying about would tax 3 estates out of 1,000, instead of 2 estates out of 1,000 under the current grotesquely unfair system. Alexander Bolton of The Hill reported how this is playing out in the cute little dance Obama, Boehner, Reid and Miss McConnell have choreographed.

Miss McConnell, he reported, called a Republican Senate conference to plot strategy and "the consensus that emerged during the meeting is that Senate Republicans could accept a deal that extends the Bush-era income tax rates for a vast majority of the populace and also extends the 35 percent tax rate on inheritances over $5 million per spouse." Not much of a "compromise" for Obama and the ConservaDems, who fully embrace the idea but want to use the GOP to give them cover and make it look like they were positively "forced" into it. Going over the "cliff" would achieve everything the Democrats are getting and more-- and without giving in to plutocratic blackmail and the consistent chipping away at Obama's pathetic bargaining positions. If he started by saying he wanted to return to the much more healthy Eisenhower rates on extreme wealth, the GOP would be bargaining for their lives without enslaving working families as the end result. Obama never learns... or this is precisely what Obama wants.

Another Republican senator confirmed that such a proposal could attract a significant number of Republican votes, especially if it shifted the threshold for extending income tax rates to cover family income up to $400,000 or $500,000.

But there are obstacles. Liberal Senate Democrats may balk at the prospect of extending the estate tax in its current form. Many liberals were furious after Obama struck a deal with McConnell two years ago extending all of the Bush-era income tax rates and setting the estate tax at its current level.

Senate Republicans would be further enticed to support a package that kept dividend tax rates from rising to their pre-2003 levels. Obama’s budget proposed letting the 2003 dividend tax cut expire, which would boost the rate for married couples earning over $250,000 from 15 percent to 39.6 percent.

Liberal Democrats such as Sen. Jay Rockefeller (D-W.Va.) declined to say whether keeping the estate tax at its current level would jeopardize their support for a deal.

“Let’s see what tomorrow brings,” he said.

But extending the inheritance tax rate at 35 percent with large exemptions could prove popular among Democratic centrists facing tough re-elections in rural states, such as Sens. Mark Pryor (AR), Max Baucus (MT), Mary Landrieu (LA) and Kay Hagan (NC).

Pryor, Baucus and Landrieu have said they do not support the Democratic leadership’s plan to raise the rate to 45 percent and lower the exemption to $3.5 million.

Some Republicans and centrist Democrats say the biggest problem, however, remains the House. They question whether Speaker John Boehner (R-OH) can pass any bill that allows rates on some tax brackets to revert to Clinton-era levels. 

Liberal Democrats would be more inclined to support a compromise if it included unemployment insurance for 2 million people, which Obama called for in a statement last week.

“If the president puts something out and the Senate passes it, then the speaker is the key,” said Sen. Ben Nelson (D-NE).

This is why Boehner and House Minority Leader Nancy Pelosi (D-Calif.) must remain looped into the talks even though Senate Majority Leader Harry Reid (D-Nev.) and McConnell are now expected to take the lead in negotiating a compromise with Obama. All four leaders will be at the White House on Friday.

Boehner told Republican colleagues during a conference call Thursday the House had acted on two bills to avoid the so-called fiscal cliff and that it is now up to the Senate to act.

One of the House-passed bills would extend all of the Bush-era tax rates; the other would replace automatic spending cuts known as the sequester with other reductions. Neither has a chance of passing the Senate without substantial revision.

House Republican leaders informed lawmakers the lower chamber would come back into session on Sunday evening to consider any compromise that might come out of the Senate.

Boehner and McConnell, who was whining how the Republicans can't be expected to write the Democrats "a blank check...just because we find ourselves at the edge of the cliff."-- know just how to work Obama-- like a ping pong ball.

Last night, just after 5pm, President Obama released a statement that sounds predictably optimistic about how the wonderful U.S. political elites are saving us from the crisis they created by screwing the middle class again:

We’re now at the point where, in just four days, every American’s tax rates are scheduled to go up by law. Every American’s paycheck will get considerably smaller. And that would be the wrong thing to do for our economy, it would be bad for middle-class families, and it would be bad for businesses that depend on family spending. Fortunately, Congress can prevent it from happening if they act right now.

I just had a good and constructive discussion here at the White House with Senate and House leadership about how to prevent this tax hike on the middle class, and I’m optimistic we may still be able to reach an agreement that can pass both houses in time. Senators Reid and McConnell are working on such an agreement as we speak.

But if an agreement isn’t reached in time between Senator Reid and Senator McConnell, then I will urge Senator Reid to bring to the floor a basic package for an up-or-down vote–- one that protects the middle class from an income tax hike, extends the vital lifeline of unemployment insurance to two million Americans looking for a job, and lays the groundwork for future cooperation on more economic growth and deficit reduction.

I believe such a proposal could pass both houses with bipartisan majorities as long as those leaders allow it to actually come to a vote. If members of the House or the Senate want to vote no, they can–- but we should let everybody vote. That’s the way this is supposed to work. If you can get a majority in the House and you can get a majority in the Senate, then we should be able to pass a bill.

So the American people are watching what we do here. Obviously, their patience is already thin. This is déjà vu all over again. America wonders why it is that in this town, for some reason, you can't get stuff done in an organized timetable; why everything always has to wait until the last minute. Well, we're now at the last minute, and the American people are not going to have any patience for a politically self-inflicted wound to our economy. Not right now.

The economy is growing, but sustaining that trend is going to require elected officials to do their jobs. The housing market is recovering, but that could be impacted if folks are seeing smaller paychecks. The unemployment rate is the lowest it’s been since 2008, but already you're seeing businesses and consumers starting to hold back because of the dysfunction that they see in Washington.

Economists, business leaders all think that we’re poised to grow in 2013–- as long as politics in Washington don’t get in the way of America’s progress.

So we've got to get this done. I just want to repeat-- we had a constructive meeting today. Senators Reid and McConnell are discussing a potential agreement where we can get a bipartisan bill out of the Senate, over to the House and done in a timely fashion so that we've met the December 31st deadline. But given how things have been working in this town, we always have to wait and see until it actually happens. The one thing that the American people should not have to wait and see is some sort of action.

So if we don’t see an agreement between the two leaders in the Senate, I expect a bill to go on the floor-- and I've asked Senator Reid to do this-- put a bill on the floor that makes sure that taxes on middle-class families don’t go up, that unemployment insurance is still available for two million people, and that lays the groundwork, then, for additional deficit reduction and economic growth steps that we can take in the New Year.

But let's not miss this deadline. That’s the bare minimum that we should be able to get done, and it shouldn’t be that hard since Democrats and Republicans both say they don’t want to see taxes go up on middle-class families.

I just have to repeat-- outside of Washington, nobody understands how it is that this seems to be a repeat pattern over and over again. Ordinary folks, they do their jobs. They meet deadlines. They sit down and they discuss things, and then things happen. If there are disagreements, they sort through the disagreements. The notion that our elected leadership can't do the same thing is mind-boggling to them. It needs to stop.

So I'm modestly optimistic that an agreement can be achieved. Nobody is going to get 100 percent of what they want, but let's make sure that middle-class families and the American economy -- and, in fact, the world economy-- aren't adversely impacted because people can't do their jobs.

Republicans, meanwhile, have no interest beyond causing maximum pain to the maximum number of people and blaming it on Obama. Charles Krauthammer, for example, was on Fox last night strategizing about how the GOP can play the game:

"I think the Republicans will surely have a much stronger hand-- assuming we go over the cliff-- assuming Obama stays very hard-line and offers only humiliating conditions and the Republicans resist or do nothing and we go over the cliff.

Then, I think, you're right, the Republicans have a pretty strong hand, because Obama then has to worry about the debt ceiling.

With bravado, he says 'Oh, that's a game I won't play.' He has to play, he's the president."