The previous rounds of the Democratic meltdown might have only provided an appetizer, if Politico’s report this morning is accurate. Leadership will apparently throw in the towel and scale back the massive reconciliation bill. In the process, they will toss out the tax-the-rich policies that progressives love.
Or will they?
Democrats will likely drop hundreds of billions of dollars in proposed tax increases on the rich as they scramble to shrink the size of their “reconciliation” package.
That’s good news for moderates who are less enthusiastic about raising rates. But it’s potentially terrible news for progressives hoping to stick it to the rich. Many see this as their best chance in years to push through major changes in how wealthy people are taxed — such as a proposal to begin taxing, for the first time, billionaires’ unrealized capital gains. …
It’s the flip side to Democrats’ decision to scale back their spending plans. Much of the focus in Washington has been on how they will slim down their package, by either dropping lower-priority initiatives or funding more programs for shorter periods of time, in hopes Congress will re-up them later.
But a smaller price tag will also mean big changes on the tax side as well because Democrats are unlikely to raise taxes by more than they need to defray the cost of their plans.
How likely is this? For the progressives that have taken control over the Democratic Party agenda, these taxes weren’t a means to an end. They were the end itself. They want punitive taxes on the wealthy regardless of funding necessities, as a punishment for capital accumulation in what they see as a zero-sum game.
They’re already clearing their throats on that point, in fact:
Some progressives acknowledge that some of the most aggressive tax proposals could now fall by the wayside, as the demand for revenue eases, but warn Democrats against backing off plans to target the uber-rich.
“We will make a lot of noise – we will not be very happy,” said Frank Clemente, head of Americans for Tax Fairness, a group pushing for higher taxes on the wealthy.
Yeah, color me skeptical on this proposal especially. Rep. Pramila Jayapal made a point yesterday of insisting that progressives wouldn’t even consider slimming down the reconciliation package, offering instead to structure it even less honestly than before to reduce the deficit scoring. Otherwise, Jayapal complained, that would put progressives into a position where they would be forced to — gasp! — make decisions on funding priorities:
Rep. Jayapal on reconciliation package: "We can't pit child care against pre-K. We can't pit pre-K against climate change. We can't pit housing against immigration. So all of these priorities need to be in there, and I think we're kind of coalescing around that." pic.twitter.com/jrqNkDyk2o
— CBS News (@CBSNews) October 7, 2021
At some point, Jayapal and her fellow progressives might be forced to swallow some bitter medicine on funding priorities. That will, however, almost certainly produce even more obstinacy on including their soak-the-rich tax policies, including the innovation-killing idea of taxing unrealized capital gains.
This looks less like a new direction for Democrats than a trial balloon by one side or the other in the Democratic family feud. Progressives might have leaked this to fire up their activist base, or leadership might have leaked it to corner the progressives. Given their supine relationship to the Bernie Bros thus far, the latter seems very, very unlikely. About the only conclusion we can draw from this is how futile this entire exercise will prove for Democrats, and how they may need to pass the bipartisan infrastructure bill to get any kind of a win out of it.
Addendum This certainly doesn’t look like much of an impending progressive climb-down:
Washington Rep. Pramila Jayapal, the head of the Congressional Progressive Caucus, says she has pushed President Joe Biden to hold the line and keep his ambitious social spending plan closer to $3 trillion instead of the $2 trillion range that he has floated to Democrats in recent days.
Jayapal told The Associated Press in an interview Thursday that she had told Biden that his suggestion for compromise was “too low, and I said that I would really like to be closer to three.” The original amount for the package of Democratic initiatives, including expanded child care, health care, education and environmental programs, was $3.5 trillion.
That’s still twice as much as Manchin says he’ll accept.