Washington’s deficit-reduction talks are deadlocked over taxes. Republicans won’t touch them, and Democrats want new levies on everything from horses to airplanes. Senate Majority Leader Harry Reid explained he is keeping the Senate in town next week to keep fighting against “Republicans’ stubborn insistence on protecting taxpayer-funded giveaways to corporations and individuals that don’t need the giveaways.”
President Obama had laid down the class-warfare marker Wednesday, insisting that tax increases on “millionaires and billionaires” would reduce the deficit and create jobs. In reality, anyone with a combined income of more than $250,000, including small-business owners who file as individuals, would pay more.
The president also would end “tax breaks for oil companies and hedge-fund managers and corporate-jet owners.” Senate Majority Whip Richard J. Durbin added on Thursday that the Democrats want to end “the litany of subsidies we’ve gone through, from yachts, to thoroughbred horses, to jetliners of commercial entities.”
Feeling betrayed, union bosses at the International Association of Machinists and Aerospace Workers and General Aviation Manufacturers Association fired off an angry letter to Mr. Obama saying that “such talk may appear to some as good politics, the reality is that it hurts one of the leading manufacturing and exporting industries in the United States. And it adds to the pain so many working families have endured.”
That pain would produce little gain. At best, closing this so-called loophole would yield about $3 billion to Uncle Sam over 10 years. All the proposed taxes on U.S. oil companies would generate $44 billion over 10 years - all of which would be passed along to consumers already suffering from paying $4 at the pump. These measures add up to 0.3 percent of our $14.3 trillion debt.
It’s hard to take such proposals seriously, but the president won’t budge unless Republicans take a “balanced approach” - his code for raising taxes. House Speaker John A. Boehner, Ohio Republican, responded immediately, “The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House.”
It’s becoming obvious that the Democratic plan is either to use the looming Aug. 2 Treasury Department deadline to scare Republicans into sharing the blame for tax increases or to saddle Republicans with the blame for any default. The problem with the strategy is that Americans have had to cut back in the downturn, and they see Washington hasn’t. As one GOP aide explained, “I don’t know what planet Democrats are living on, but making tax hikes the linchpin of their economic strategy is probably one of the worst ideas they could have ever conceived.”
Emily Miller is a senior editor for the Opinion pages at The Washington Times.