Panic time: Dems ready to extend Bush tax cuts for the wealthy too?

It’s the wealthy who drive consumer spending and the last thing you want to do in this economy is reduce that by raising taxes on them, so there’s the economic argument for extension. But how will they get away with this among the lefty base? The core electoral argument for passing ObamaCare was that liberal turnout would collapse in the midterms if the Democrats disappointed them by failing on a core agenda item (again). Ending the Bush tax cuts for the rich is pretty core too, though — Obama promised to do it during the campaign — and yet they’re now thinking of extending them for a year, two years, or even more in the name of further stimulus, notwithstanding the deficit-reducing tax revenue that’ll be lost in doing so. It’s a tough choice on the merits — economic health versus budgetary health — but politically I’m surprised that they’d be willing to play chicken with their base. Independents are a lost cause, so at this point, lefty turnout is pretty much their only hope of mitigating GOP gains in the House, no?

The revelation that tax increases could hurt the economy has recently been heard from Senators Evan Bayh of Indiana, Ben Nelson of Nebraska, and, most surprising, even from Kent Conrad of North Dakota. On a scale of unlikely events, this is like the Pope coming out against celibacy. As Senate Budget Chairman, Mr. Conrad has rarely seen a tax increase he didn’t like, but this week he averred that “As a general rule, you don’t want to be cutting spending or raising taxes in the midst of a downturn.”

Over in the House, Bobby Bright of Alabama even dared to defend the rich Americans who Democrats have been pounding for years. “I don’t care if it’s the wealthiest of the wealthy. You don’t raise their taxes,” he told The Hill newspaper. “In a recession you don’t tax, burden and restrict.” Better don the body armor on your next visit to the Speaker’s office, Bobby…

The reality is that the increase in the top marginal income tax rate to higher than 41% will hit the most profitable small businesses especially hard. That’s because millions of business owners pay individual rates under Subchapter S of the tax code. Today, this means they pay the same top rate as the Fortune 500: 35%. But if the 2003 tax rates expire, they’ll suddenly pay more than Goldman Sachs.

Read the whole thing, which ends with a familiar win-win argument about how cutting taxes will generate more growth which in turn will end up reducing the deficit by boosting tax revenue. Naturally, Pelosi’s against the idea of extending the cuts for the wealthiest taxpayers and, last I checked, so is The One, which means we may be headed for some sort of showdown pitting vulnerable centrist Dems as the champions of the rich right before they ask grassroots liberals to come out and vote for them in the midterms. Nuance. Here’s video of (former?) Randian Alan Greenspan siding with Pelosi in the name of deficit reduction. Can’t wait for angry lefties to complain that Kent Conrad et al. are actually further to the right than Alan Greenspan.