What Happens If the Tax-Cut Deal Falls Apart?

By
As usual, a lot depends on this lady. Photo: Jewel Samad/AFP/Getty Images

This morning, in their latest sign of defiance over the tax-cut deal struck between President Obama and GOP leadership, the House Democrats passed, by voice vote, a nonbinding resolution against bringing the package to the floor. How many House Democrats would vote for the bill if they get the chance — Obama would only need about 40 of them if the Republicans stay unified — is still unclear. It's also uncertain whether Nancy Pelosi would actually refuse to put the package up for a vote as her caucus wishes. For now, she says in a statement: "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 House Democrats want some more concessions; they seem to be especially unhappy with how the new estate tax is structured. But Vice-President Joe Biden made clear yesterday that the compromise the White House had struck with the GOP was not up for negotiation. The Republican leadership is equally uninterested in further debate. "A deal is a deal, and we shook hands on it," Senate Minority Leader Mitch McConnell told Fox News.

The Senate is expected to approve the tax-cut deal soon. And there's still a very good chance that there are enough Democrats in the House to get in through that chamber as well. But what happens if there aren't? What will be the political fallout if the tax-cut deal dies in the lame-duck session?

Congressional Republicans: They would be the big winners in this scenario. In a few weeks, the members of the 112th Congress will take their seats, at which point the GOP will control the House and 47 seats in the Senate. If they want to pass the package at that point, they could, easily. If they want to use their newfound Congressional power to renegotiate with Obama for a more favorable deal, one which doesn't include as many Democratic-friendly tax breaks, they could do that too. Assuming they don't get too greedy, there's no reason to think Obama wouldn't sign it.

Congressional Democrats: The Democrats would be greeted as heroes by the liberal base for standing up for the party's convictions and showing some spine, for once, in the face of Republican unreasonableness — but only the liberal base. Because according to a new Rasmussen poll, even a plurality of Democratic voters approve of the deal, 48 percent to 38 percent. Trying to scuttle the deal wouldn't help the Congressional Democrats with independents (51 percent approve, says Rasmussen) or moderates of any party, either. And they could very well end up seeing fewer of the progressive, stimulative taxes included in the current compromise.

President Obama: He'll continue to catch flak from his base, and even more so if he signs onto a renegotiated agreement that moves further in the GOP's direction. But in that scenario, by agreeing to a tax package that is so clearly reviled by the Democratic Party, he'd only further his burgeoning image as a pragmatic, across-the-aisle compromiser, which to people who don't get their news from Daily Kos and Countdown is actually a positive thing.