Tax policy debate is a departure from 2010

WASHINGTON — As congressional Democrats prepare to vote this week on President Obama’s proposal to raise tax rates for wealthier Americans, the strategy is a turnaround from two years ago.

In 2010, Democrats never would have dared to do this. Faced with expiring tax breaks from the George W. Bushadministration, the White House and its allies on Capitol Hill appeared so nervous about the pending midterm election that they postponed action on the tax issue until after November.

After the tea party-fueled Republican electoral sweep, Democrats struck a lame-duck deal to keep the tax breaks in place for two more years. Liberals were outraged and rank-and-file Democrats have grumbled ever since that the action smudged the party brand and amounted to a lopsided defeat.

Now, Democrats have shifted strategy dramatically, believing the public is on their side as they head into the general election, playing hardball with the GOP to force a national debate on tax policy.

“This is the first time, frankly, in 30 years that Democrats have the high ground on taxes,” said Sen. Charles E. Schumer (D-N.Y.), the party’s chief political strategist in the Senate. “Republicans have tried to conflate tax cuts on the wealthy with tax cuts for the middle class. We are finally breaking that padlock that they’ve had on this issue. And they don’t like it.”

The Senate is scheduled to vote Wednesday on competing proposals: One from Republicans that would continue the Bush-era tax rates across all income groups. And another from Democrats that would keep tax breaks for all but 2% of Americans, allowing the top-tier rates to rise for individuals with incomes above $200,000 a year, or $250,000 for couples.

A report from the White House released Tuesday said the Republican plan would add $1 trillion to the deficit over the next decade.

A similar showdown is planned next week in the House.

Rep. Kevin McCarthy (R-Bakersfield), the No. 3 House Republican and a key party strategist, challenged Democrats who voted to extend the tax breaks two years ago to explain their opposition now.

“So what has changed today?” he asked. McCarthy has been working with lawmakers as they prepare to take their tax votes on the campaign trail for the August recess. “I think we would stand very strong with the voters.”

Polls, though, suggest a shift in voter attitudes as the nation’s widening income disparity became a catchphrase of the Occupy Wall Street movement and the tea party’s deficit-reduction ideas caught on.

Two years ago, Americans held mixed views, with some polls showing a majority supported tax breaks for all income levels but later opposed tax cuts for the wealthy. This year, voters say they want upper-income earners to pay more. A tax on those who make at least $1 million a year, which is not on the table, drew off-the-charts support.

Bolstered by such attitudes, Democrats are willing to simply walk away — letting all the tax breaks expire at the end of the year, as will happen without any action — if Republicans continue to fight for tax breaks for the wealthy. Republicans dismiss this as “Thelma and Louise” economics — off the cliff.

None of the bills being voted on are expected to pass, but the votes lawmakers take will have a second life on the campaign trail — and in the year-end negotiations to come.

lisa.mascaro@latimes.com