According to The Washington Post‘s Ezra Klein, President Obama’s $3.8 trillion budget is designed to force Republicans to pass new tax hikes once “political anger” about this year’s $85 billion sequester spending cuts kick in.
Don’t hold your breath waiting for that to happen.
A much more likely scenario is a replay of this winter’s fiscal cliff end game where a firm make-or-break deadline, the expiring Bush tax hikes, forced a deal between the two parties. At the time, people wondered how K Street managed to get more than $76 billion in special-interest tax credits for the likes of General Electric, Hollywood and Captain Morgan inserted into such fast-moving, must-pass legislation. Thanks to The Washington Examiner‘s Tim Carney we quickly learned the answer to that question: Senate Finance Committee Chairman Max Baucus.
Here’s what happened: In late July, Finance Chairman Max Baucus announced the committee would soon convene to craft a bill extending many expiring tax credits. This attracted lobbyists like a raw steak attracts wolves. … The Family and Business Tax Cut Certainty Act of 2012, which passed through the Senate Finance Committee in August, was copied and pasted into the fiscal cliff legislation, yielding a victory for biotech companies, wind-turbine-makers, biodiesel producers, film studios — and their lobbyists. So, if you’re wondering how algae subsidies became part of a must-pass package to avert the dreaded fiscal cliff, credit the Biotechnology Industry Organization’s lobbying last summer.
Fast forward to this Monday when The Washington Post‘s Lori Montgomery reported:
Last month, Sen. Max Baucus summoned members of the Senate Finance Committee to a closed-door meeting to discuss the first full-scale rewrite of the 5,600-page U.S. tax code in more than 25 years. … They found a detailed schedule of 10 more meetings, where committee staff members will present option papers for achieving such popular goals as simpler filing rules.
And they found Baucus in emphatic agreement with Sen. Orrin G. Hatch (Utah), the ranking Republican on the panel, according to notes taken by a Democratic aide in attendance, that the committee should aim to produce a tax-reform plan by August, when Congress will once again need a face-saving deal to justify raising the legal limit on the $16.8 trillion in federal debt.
Republicans can easily survive the almost comically small sequester cuts that are slowly being phased in now. But there is no way they could survive the immediate and far-reaching 40 percent spending cuts that would occur if the debt limit is not raised.
House Republican leaders currently have no plan on how to get insurgents like Reps. Tim Huelskamp, R-Kan., and Justin Amash, R-Mich., to vote for raising that borrowing limit. This empowers Baucus and Obama who can deliver the Democratic votes House Republicans will need to make up for the Huelskamp and Amash defections.
If Obama does win another round of tax hikes, those hikes will almost certainly look exactly like whatever Baucus’s committee produces this summer, and they will occur thanks to Huelskamp and Amash.