Mike Doyle on Democratic opposition to tax compromise

December 9, 2010
Pittsburgh City Paper

Pittsburgh congressman Mike Doyle is among the House Democrats opposing President Barack Obama’s controversial tax-cut compromise with the GOP.

“This has been brewing for quite some time,” Doyle says of Democratic opposition. Not only do House Democrats question the terms of the deal, he says, but they feel they deserved a larger role in negotiating them.

“There’s been a frustration for House Democrats,” says Doyle. “We’ve really carried this President’s agenda, only to watch it languish in the Senate.” That’s been true on a slew of progressive causes. But in this case, Doyle says, they had no role in crafting the agenda at all.

Under the terms of the deal, Obama has agreed to extend tax breaks on the wealthy; in exchange, Republicans have agreed to support an extension in unemployment benefits and other aid for middle-class families.

But “Parts of the package were just too much,” Doyle says.

Specifically, Doyle points to the proposal’s scaled-down estate tax. Under the compromise, the tax would be levied at a lower rate (35 percent instead of 55 percent) and on a much smaller number of inheritances — those worth at least $5 million rather than $1 million. Estimates of the impact are hard to come by, but the government could be giving up an estimated $50 billion in revenue. And the benefits of such a tax cut accrue to a very small fraction of wealthy Americans.

“To spend all that money to benefit 37,000 of the wealthiest estates of America — some of us just can’t swallow that,” Doyle says.

Doyle also thinks the administration could have done a better job even on negotiating its own end of the bargain.

Take the 2 percentage-point cut in the payroll tax, whose proceeds pay for Social Security. That tax cut would generate an estimated $1,000 for the average American, but as it’s currently structured, Doyle notes, it would “dribble out” over the course of an entire year, in the form of a tiny $20-per-week reduction in withholding.

“This will be a tax cut no one believes they got,” Doyle predicts. And human nature being what it is, “No one will notice the cut, but they’ll complain when it expires.” That, he frets, will make it easier for Republicans to begin calling for the tax cut to be made permanent — just as they’ve been doing with the Bush-era tax cuts Obama has reluctantly agreed to extend.

Cutting the payroll tax permanently would be a problem for Democrats, because a permanent cut could exacerbate a funding shortfall in Social Security, which has long been in Republican crosshairs. Social Security already faces fiscal challenges that Republicans have been only to happy to trumpet; cutting the payroll tax — which will cost an estimated $120 billion a year — will only worsen the problem.

Doyle says that if he had his druthers, the tax break would came as a one-time upfront payment — perferably early in the year. That would feel more like a sort of bonus, rather than a long-term reduction of the rate. Not only would such a payment have more upfront impact, he surmises, but Republicans would have a harder time trying to make a tax cut permanent, since Americans would see the same amount coming out of their paychecks every month.

“This is the messaging part of things,” Doyle says. “Too often we win these battles but lose the argument.” He notes that Obama cut taxes during his first year of office, but because that break was spread out over the course of a year, “I can’t tell you how many meetings I’ve been to and asked ‘who got a tax cut?’ and nobody raised their hands.”

But will Doyle’s stand — and those of his fellow Democrats — make a difference?

The initial conventional wisdom was that today’s vote doesn’t really affect the bill’s prospects: The compromise is expected to receive heavy Republican backing, so support from liberal-minded Democrats isn’t necessary. Then again, House speaker Nancy Pelosi is citing the vote at the basis for negotiating changes to the compromise:

In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written. We will continue discussions with the President and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.

“The leadership is on board,” Doyle says. “I don’t think anyone in our leadership likes what’s going on. This bill isn’t going to be brought up in its current form.”

Of course, the fear is that this is the best deal Democrats can hope to get. In January, control of the House will shift to Republicans as a result of the November elections. And that means Doyle and his colleagues will have even less leverage than they feel like they’ve had so far.

So what would he tell an unemployed Pennsylvanian whose benefits are set to expire? A Pennsylvanian who thought the compromise at least bought some time, but is now holding his or her breath?

“Well, I’d say that we are the party that is committed to helping the unemployed,” Doyle says. “It’s our priority, not the Republicans’. And it’s why we will end up swallowing some things that are so distasteful to us — becuase we care so much about working people. But at some point, you have to say, ‘Enough.’ I’ve been one of the president’s biggest champions in the Pennsylvania delegation. But sometimes, friends have to tell friends, ‘This isn’t working.’

“I don’t think anyone believes we’ll get a better deal on January 5 [when the new session of Congress convenes],” Doyle adds. “But this is only Dec. 9. We’re not looking to kill the process now and not come back until January. We want to rework this into something we can vote for.

“We know this battle won’t last forever, but Dec. 9 is not the date to surrender. We’re going to fight this fight, and get the best deal we can.”

ADDED: I should also note that Doyle says his staff has logged roughly 250 calls on the issue. And so far, he says, “95 to 99 percent” of them have been opposed to the compromise.