Democrats win key tax fights in emerging fiscal cliff deal

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Democrats win key tax fights in emerging fiscal cliff deal

Joe Biden and Mitch McConnell are shown here. | AP Photo

The deal was primarily negotiated between Joe Biden and Mitch McConnell. | AP Photo


The emerging fiscal cliff deal is enough to leave Republicans with a major New Year’s hangover.

The package being negotiated by Senate Republican Leader Mitch McConnell and Vice President Joe Biden amounts to a defeat for the GOP on multiple fronts.

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(PHOTOS: 11 side effects of going over the cliff)

It not only raises tax rates, but also extends stimulus-era tax policy, prolongs emergency unemployment benefits, maintains targeted tax breaks derided by the party as corporate handouts and revives limits on deductions for the wealthy that have been dormant for almost a decade — all policies that the GOP has fought. It’s expected to raise $600 billion over 10 years.

Obama- PR

Obama- PR

Above all, the emerging deal would shatter 20 years of Republican orthodoxy on taxes, undercutting a core part of the party identity that had been built around giving no quarter to any tax increase — ever. An eventual vote on this tax package would mark the first time any Republicans have voted en masse on a tax increase since President George H.W. Bush famously recanted on his “read my lips” promise.

Democrats are making concessions of their own, especially on the threshold at which tax rate hikes should kick in. After a campaign that centered on raising taxes for those making more than $250,000, the deal would instead raise the bar to $400,000 for individuals and $450,000 for married couples. Democrats also failed in their bid to subject more inheritances to a steeper estate tax and increase the debt ceiling as part of a fiscal cliff package.

(Also on POLITICO: Breakthrough on fiscal cliff)

Still, conservative commentators were quick to pan the deal and urged GOP lawmakers to fight it.

“Republicans should kill the compromise plan for the fiscal cliff,” Erick Erickson wrote on his Web site Monday.

There are plenty of uncertainties remaining as the clock ticks down to Jan. 1. Lawmakers in the Senate could block a swift vote on the deal. The House could amend it or reject it in whole.

McConnell is working to avoid such a rebellion. He spoke on the Senate floor Monday afternoon and said that the deal solves the most urgent aspect of the fiscal cliff — tax policy — while leaving room to work on spending cuts.

“Let’s pass the tax relief portion now,” he said. “Let’s take what has been agreed to and get moving.”

(PHOTOS: 12 Republicans resigned to higher taxes)

In an afternoon appearance at the White House, President Barack Obama touted the deal for raising tax rates on top earners. But perhaps the most symbolic win for Democrats is the continuation of key stimulus-era tax provisions.
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America’s Voice

Viewpoint: Where Republicans Are Going Wrong On The Fiscal Cliff

By Dec. 20, 201216 Comments
image: House Speaker John Boehner makes a brief statement to the media at the Capitol in Washington, Dec. 19, 2012.
GARY CAMERON / REUTERSHouse Speaker John Boehner makes a brief statement to the media at the Capitol in Washington, Dec. 19, 2012.

Republicans are heading toward defeat on the fiscal cliff, but not for the reason they think. The failure is not that they will have to allow taxes to increase, but that they will no longer be seen as a watchdog for taxpayers and the party of less wasteful Washington spending.

To most Americans, the cause of our budgetary woes is not about taxes at all. It’s about a wasteful Washington culture that can’t stop spending. In a poll we conducted on election night for the Republican Main Street Partnership of voters nationwide, Americans are clearly more in favor of budget cuts rather than tax increases — and the one dollar in tax hikes for one dollar in budget cuts deal that is currently under discussion will be overwhelmingly rejected by Republicans and Democrats alike. While the public does endorse some tax increase and does want an agreement reached, even among Democrats, there’s far more supportfor trimming the budget than raising taxes.

(MORE: The Making of a Cliffhanger)Time Logo

Republicans are missing the bigger picture.  In traditional polls, people often say that the two issues they care about most are jobs and the deficit, but in the focus groups I have conducted for Fox News and CBS News and for various corporate clients over the past 100 days, what seems to matters most to Americans begins with the question: “Can America afford the path we’re on?” 

Affordability is how Americans process their anxieties, not by isolating issues but by personalizing what it means to live a lower quality of life. “Can America afford the path we’re on?” encapsulates everything — jobs, spending, the debt, and a growing fear of the future. President Obama’s approach to that question, and to the fiscal cliff, is to demand tax increases on the rich, declaring that the top two percent aren’t paying their fair share.

But there’s another question, equally as powerful, that would have put Congressional Republicans on sturdy footing: “Who is fighting for hardworking taxpayers?”  Notice that I didn’t say “middle class.”  That phrase — and all the imagery around it — was bought and owned by the Democrats decades ago. (Democrats also own “working Americans,” “the working class,” and any phrase that has “class” in it.)

(MORE: Why the Fiscal Cliff Negotiations Are More Complicated Than We Think)

The problem: “Middle class” and “working class” are both political speak. That’s how politicians label us, but it’s not how we identify ourselves or talk to one another. We say it’s about “people like me” and “folks like us.” And we want someone to listen, understand, and fight for us as we work hard every day just to survive. That’s why “fighting for hardworking taxpayers” is so much more compelling than “fighting for the middle class.”

Instead, the GOP decided to focus its appeal on behalf of small business owners. But while almost everyone considers themselves a “hardworking taxpayer,” only a fraction of America considers themselves a small business owner.  The GOP is protecting the wrong victim — and by a whopping 72% to 28% margin, the American people know it.

Republicans also made a big mistake by allowing the fiscal cliff narrative to be about taxes rather than government spending. By defending tax cuts for the rich, they are proving the Obama election narrative that they only care about the few.

It comes down to a difference between “tax” and “take.” Most polls show roughly 70% support for taxing the wealthy more, but ask Americans if they think government should “take” more and the answer is no. Taxing more is acceptable because people think the rich avoid what they should be paying. But the government taking — and spending — more is unacceptable because we earned that money and should have the right to spend it ourselves. If Republicans ever want to get back into the White House, they need to pick their battles a lot more carefully to be in line with how real Americans think and feel. And they will need a new language to go along with new policies.

MORE: Why We Should Go Over the Fiscal Cliff


Frank Luntz is a pollster and communication advisor to more than a dozen Fortune 500 CEOs and companies. The views expressed are solely his own.

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