A couple of weeks ago, House Minority Leader and former Speaker Nancy Pelosi dropped a bombshell into the laps of the Democratic caucus and her president.
Rep. Pelosi (D-Calif.), the very symbol of hardcore liberalism, wrote a letter to the current speaker, Rep. John Boehner (R-Ohio), calling for an immediate vote to extend the Bush tax cuts to households earning less than $1 million and to make them permanent.
If you think something’s strange, you’re right. Pelosi, like most Democrats—notably President Obama—have drawn a line in the sand on the Bush tax cuts, which they see, with some justice, as a principal agent of income inequality as well as of a ballooning federal deficit.
The Bush tax cuts deprived the Treasury of an estimated $1 trillion in tax revenues over its first ten years. Eliminating all the cuts would go a long way towards bringing the US back from the fiscal cliff. But they also would likely push the economy into another recession and disproportionately hurt middle class Americans, who are already hanging on by their fingertips.
That’s why since his 2008 campaign the president has opposed extending the cuts for those making over $250,000. (Senate Majority Leader Harry Reid still supports that position.)
But during the lame-duck session of 2010, he agreed to kick the can down the road for another two years. Congress must now vote on that, among other pressing items, before the end of the year.
That’s why this move by Pelosi is a stunner.
Citizens for Tax Justice estimates that eliminating the tax cuts above the first $250,000 a household earns would raise an additional $60 to $70 billion in 2013. But raising it only on households earning more than $1 million a year would cost the government $25-$30 billion a year, a substantial shortfall.
Liberal bloggers already have accused the former Speaker of a preemptive cave of the kind the president made in 2010. They also speculate that this is part of a grand strategy between the president and Pelosi to expose the GOP leadership as being completely unwilling to compromise.
That may be too clever by half. Consider what the former Speaker has done so far. She:
- Oversawthe flawed stimulus bill with big giveaways to public unions at the expense of more useful—and popular—infrastructure spending.
- Pushed through the grandiose but deeply flawed Affordable Care Act following the2010 special election victory of Republican Sen. Scott Brown in Massachusetts—a clear protest vote against big government and health care reform.
- Again on health care declared that “we have to pass the bill so that you can find out what is in it” and when asked whether the bill might be unconstitutional asked “Are you serious?” The Supreme Court looks like it is.
- Is worth more than $35 million and was tongue tied when CBS News’ 60 Minutes asked about inside trades in which she participated which were probably legal but smacked of conflicts of interest.
Pelosi has been no friend of this president, so unless this is a three-dimensional chess game they’re both playing against Republicans, the former Speaker may be stabbing her president in the back once again for God knows what reason.