Forty-seven House Democrats sent a letter to Speaker Nancy Pelosi siding with their Republican colleagues:
“Raising taxes on capital gains and dividends could discourage individuals and businesses from saving and investing,” said the letter, dated Friday and released Tuesday. “We urge you to maintain the current tax rate for both dividend and long-term capital gains taxes.”
Tax cuts enacted in 2003 set the top tax rate on capital gains and dividends at 15 percent. Those tax cuts expire at the end of the year, and Obama wants to let the top tax rate on capital gains and dividends increase to 20 percent for individuals making more than $200,000 and married couples making more than $250,000.
Yes, that’s more than enough to pass the extension, but Pelosi is unlikely to allow such a vote. It’s panic time in the Democratic ranks:
The letter shows that many Democrats, some of them vulnerable in the upcoming elections, are unwilling to follow Obama on taxes. … The letter was signed by several vulnerable freshmen and members of the conservative Blue Dog coalition. The letter highlights divisions among Democrats over their party’s message on taxes just five weeks before congressional elections in which Democrats will be fighting to maintain majorities in both the House and Senate. Some Democrats have decided it is better politically to distance themselves from Obama and Pelosi as they campaign to keep their jobs.
Even though many Democrats now want to extend both these tax cuts on investment income as well as the rest of the Bush tax-cut plan, they have a serious problem with the voters. What’s their pitch? I’d vote for the tax breaks because it’s harmful to the economy to hike taxes during a recession, but my Democratic leadership won’t let me vote. The solution to that is simple: vote for their opponents, whose party would demand a vote and pass the extensions overwhelmingly.
What began as a trap for Republicans has devolved into an ideological and political dead end for liberals. Take the vote and lose, and infuriate the base. Don’t take the vote, and lose scores of House members. At this point, there is no good solution. It seems no one in the White House thought this through.