“There’s going to be opposition if these tax cuts are directed to the people at the top again,” said Rep. Richard Neal, D-Mass., who represents his party’s first line of defense as the ranking Democrat on the House’s tax-writing Ways and Means Committee. “We’re going to be pretty united.”
Neal and others say they’ll zero in on upper-income tax breaks pitched by Trump and Republican House leaders in an attempt to make it politically difficult for them to support large parts of the emerging plans. Their initial comments suggest that the 115th Congress, which convenes Jan. 3 with a Republican-led agenda of instituting a broad tax overhaul and repealing Obamacare, will be peppered with debate over income inequality.
Trump and House Speaker Paul Ryan of Wisconsin have endorsed across-the-board cuts in individual income tax rates. After Republicans took the White House and kept majorities in Congress in November’s elections, both say they aim to achieve the most far-reaching overhaul of the U.S. tax system in a generation. Details remain to be filled in; for example, Ryan and others envision significan changes for corporate taxation that Trump’s economic team has yet to embrace.
Trump has sought to portray his plan as a pro-growth simplification of the tax code that would benefit the middle class. In a “Contract with the American Voter” published before the election, his campaign said of his proposal: “The largest tax reductions are for the middle class.”
Democrats plan to challenge this claim. “His populist image and the reality of his policies are on a collision course,” said Rep. Keith Ellison of Minnesota, a candidate for Democratic National Committee chairman. “And they’re going to crash.”
Consider two major provisions on which Trump’s and Ryan’s plans agree: First, they’d compress the existing seven individual tax brackets to three, cutting rates generally across the board. Yet the largest cut would be in the top rate, to 33 percent from 39.6 percent. That rate applies only to those with incomes well within the top 1 percent. Second, their plans would abolish the estate tax, which applies only to estates worth more than $5.45 million for individuals and $10.9 million for couples. Data from the Internal Revenue Service and the U.S. Census Bureau show that far less than 1 percent of the people who die each year pay any estate tax.
An independent analysis of House Republicans’ “blueprint” found that while households at all income levels would pay less tax, “the highest-income households would receive the largest cuts, both in dollars and as a percentage of income.” After-tax incomes of the very rich — the top 0.1 percent of U.S. earners, or those with incomes over $3.7 million — would rise by almost 17 percent. At the same time, the bottom three-fifths of households would gain on average 0.5 percent or less, according to the analysis by the Tax Policy Center, a a joint venture of the Urban Institute and the Brookings Institution. Three quarters of the total tax cuts would go to the top 1 percent, that study found.
Another study of the House Republicans’ plan, by the more conservative Tax Foundation, came to a similar, if less pronounced, conclusion: On a “static” basis — that means, without accounting for the tax plan’s effects on the larger economy — after-tax income of the bottom 80 percent of taxpayers would increase no more than 0.5 percent, while it would increase 5.3 percent for the the top 1 percent. After factoring in macroeconomic effects, the Tax Foundation ffound that for all taxpayers after-tax income would increase at least 8.4 percent — but the top 1 percent would get 13 percent more .
Democratic leaders haven’t proposed a tax plan to counter the House Republican proposal. Neal said Democrats intend to introduce alternatives soon but didn’t provide details, saying only that any tax breaks should be targeted at the middle class.
The party will draw lessons from earlier fights when it was able to block changes despite lacking control of the White House and Congress, said Drew Hammill, deputy chief of staff for House Minority Leader Nancy Pelosi of California. He cited the example of Democrats defeating Republican efforts to privatize Social Security in 2005.
Replicating that feat may prove difficult. Democrats successfully framed the privatization push as one that would imperil the popular program and hurt senior citizens’ benefits, while their opponents struggled with internal divisions over the plan. Republicans today are more united, at least in principle, when it comes to reducing taxes.
Moreover, the tax plan’s promise of rate cuts for all may be attractive enough to survive arguments that it favors those with higher incomes.
New Party of No? Dems prepare for battle with Trump on Cabinet picks, agenda
After blasting Republican colleagues for years over their blockade of President Obama’s agenda, Democrats are gearing up for their turn as the opposition party – planning to throw up early roadblocks for President-elect Donald Trump’s Cabinet picks and proposals.
With the new Congress set to convene Jan. 3 – and Trump set for his inauguration on Jan. 20 – House Democratic Leader Nancy Pelosi last week issued a call to action to her rank and file to fight Republican efforts to repeal and replace the Affordable Care Act, or ObamaCare, one of Republicans’ top agenda priorities for 2017.
Pelosi is planning to intensify the “drumbeat” in the week before the inauguration, setting Jan. 14 as a “national day of action with events across the country.”
The Democrats’ bid to fend off Republican attacks on Obama’s signature domestic policy achievement is no surprise. But the resistance extends well beyond fortifying their ObamaCare defenses.
Bloomberg reports that Democrats are preparing for a separate fight with Republicans over plans to overhaul the tax code.
“There’s going to be opposition if these tax cuts are directed to the people at the top again,” Rep. Richard Neal, D-Mass., the next top Democrat on the tax-writing Ways and Means Committee, told Bloomberg. “We’re going to be pretty united.”
While Democrats have not put forward their own plan, House Republicans and Trump both have outlined overhauls. Both would reduce the number of tax brackets from seven to three, including reducing the top rate for individuals from 39.6 percent to 33 percent. The gist of the plans is to lower tax rates for most people, and make up lost revenue by scaling back exemptions, deductions and credits.
LOBBYING EFFORT IN FULL SWING TO CONFIRM SESSIONS
|© Win McNamee/Getty Images. U.S. Speaker of the House Paul Ryan (R) (R-WI) speaks with House Minority Leader Rep. Nancy Pelosi (D-CA) following an event marking the passage of the 21st Century Cures Act|
The House plan, however, retains some of the most popular tax breaks, including those for paying a mortgage, going to college, making charitable contributions and having children.
As Democrats prepare to fight proposed tax breaks for top earners, Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Paul Ryan, R-Wis., have signaled they may play hardball. Both GOP leaders have said they plan to use a legislative maneuver that would prevent Senate Democrats from using the filibuster to block a tax bill.
Senate Democrats, meanwhile, are signaling a potentially rocky road ahead for some of Trump’s Cabinet picks, last week demanding extensive financial information on some of his wealthy candidates.
Frustrated by the slow response of billionaires and multimillionaires to their request, 16 Democrats delivered an ultimatum Thursday, saying no committee should vote on a nominee until the individual has cleared an FBI background check, provided a financial report and an ethics agreement with the Office of Government Ethics, and responded to "reasonable requests for additional information" such as tax returns.
"The United States Senate has a rich, bipartisan tradition of vetting nominees to the president's Cabinet," said New York Sen. Chuck Schumer, the incoming Democratic leader.
Republicans controlling the Senate want to make quick work of Cabinet confirmations once Trump takes office on Jan. 20.
Democrats have limited options to block nominees outright because they changed filibuster rules when they controlled the Senate in 2013, and Cabinet nominees can win approval on a simple majority vote. Republicans will hold a 52-48 advantage next year. However, Democrats could drag out the process in committee or force longer Senate debates than usual.
Trump's choice of ExxonMobil CEO Rex Tillerson for secretary of state has been a focal point of the complaints. In a letter to colleagues, Maryland Sen. Ben Cardin, the Foreign Relations Committee’s top Democrat, said he asked the Trump transition team for three years' worth of tax returns because Tillerson was "actively engaged with many foreign governments" at ExxonMobil. Cardin said Tillerson "promised to provide" the tax information in response to a question on a standard questionnaire that all nominees submit prior to appearing before the committee.
Tennessee Republican Sen. Bob Corker, the committee chairman, quickly responded with a statement saying the GOP-controlled panel never officially asked for the tax returns and insisted that Tillerson was ahead of schedule in providing information to the committee. He said it is not the practice of his committee to request tax information, and the committee's own financial disclosure forms "are very expansive.”
In addition to Tillerson, Trump has tapped Steve Mnuchin, a former Goldman Sachs executive, for treasury secretary, and Betsy DeVos, daughter of the Amway co-founder, for education secretary.
Trump’s conservative allies outside Capitol Hill are preparing for confirmation turbulence. The Judicial Crisis Network recently launched a website touting the nomination of Sen. Jeff Sessions, R-Ala., for attorney general and defending his record in office.
Former House Speaker Newt Gingrich, a Trump adviser, told Fox News last week that he anticipates congressional Democrats will fall into a few groups as Trump joins with majority Republicans to pursue his agenda.
“You're going to have the hard left -- the Elizabeth Warrens who aren't going to support anybody. They'll be hostile and bitter and nasty. You're going to have the partisan group -- Pelosi is a good example. They are going to be tough-minded,” he said. “But there are going to be a lot of Democrats that are going to say ‘I don't want to deal with eight years of yelling no.’"
Battle Lines Turn North Carolina’s Moderation Into a Distant Memory
RALEIGH, N.C. — Political chaos has become as much a fixture of life here as the basketball rivalry between Duke and the University of North Carolina: four years of battles, boycotts, protests and standoffs over voting, gerrymandering, anti-discrimination ordinances, bathroom access and the ability of Republicans to strip power from the governor’s office as soon as a Democrat wins it.
The warfare has turned North Carolina, once the South’s beacon of moderation, into perhaps the most polarized state in the country. Politics, more often than not here, has become blood sport, a toxic twist on the historical tensions in a state that, much like the nation, is split down the middle even as Republicans enjoy almost all of the political power. As such, North Carolina may serve as a kind of window into the American future.
“We’ve become Exhibit A of our country’s political trends,” said Representative David E. Price, a veteran Democrat and a political scientist by training.
This is a place where the thriving, liberal population centers, like the Research Triangle of Raleigh, Durham and Chapel Hill, seem to move in orbits entirely apart from the struggling, staunchly conservative countryside.
North Carolina’s Partisan Rift Widens in Fight Over Governor’s Powers DEC. 15, 2016
North Carolina Fails to Repeal Bathroom Law That Prompted Boycotts DEC. 21, 2016
It is a place where Republican leaders, who took full control of the executive and legislative branches four years ago for the first time in more than a century, have audaciously remade rules and flouted norms in their effort to restore North Carolina to their perception of greatness.
It is a place defined by a disquieting political parallel: Once Democrats changed the rules of the game to help stave off Republicans on the rise across the South. Now the Republicans are delivering payback, trying to retain their grip even as population growth soars in its transplant-rich cities.
“We Republicans learned from the Democrats,” said Jim Martin, a former Republican governor, predicting that his party would eventually be on the receiving end of a backlash similar to the one that befell Democrats. “They’ll have accumulated the same sort of baggage, and it’ll swing back the other way.”
But some here think that the Republicans have taken extraordinary steps to subvert democratic norms by limiting access to the polls; stripping power from the Democratic governor-elect, Roy Cooper; and using sophisticated computer software to draw legislative districts that virtually ensure they will enjoy lopsided power. This year, federal courts struck down many of the voting restrictions and gerrymandered districts, saying they harmed racial minorities.
Andrew Reynolds is a political science professor at the University of North Carolina at Chapel Hill who has helped design a system called the Electoral Integrity Project, which evaluates the fairness of election systems globally. In a column this week in The News & Observer, the Raleigh newspaper, Professor Reynolds said the system’s “electoral integrity score” for North Carolina ranked the state alongside Cuba, Indonesia and Sierra Leone.
He called the state “a deeply flawed, partly free democracy that is only slightly ahead of the failed democracies that constitute much of the developing world.” He also called it the worst state in the country for unfair districting.
Mr. Cooper, who will take office Jan. 1, narrowly defeated Pat McCrory, the incumbent Republican, in November. This month, the Republican-controlled legislature passed bills to crimp the power of the governor — already a relatively weak office by design — and Mr. McCrory signed them into law.
Democrats called it a power grab. But Republicans reminded anyone who would listen about the sins of the Democratic past, including an incident in which a Democratic governor, Jim Hunt, victorious in 1976, asked for the resignation of scores of employees from the previous Republican administration.
This week brought another drama: a failed effort by legislators to repeal a controversial law, commonly known as House Bill 2, that curbs protections for lesbian, gay, bisexual and transgender people. The law led to the cancellation of planned job expansions and the relocation of coveted championship sports events out of the state.
Sara Thompson was among scores of protesters who flocked to the legislature to protest House Bill 2. But on Wednesday, she was holding a sign with a message, directed at Republicans, that was broader than L.G.B.T. rights. It declared: “Democracy: You’re doing it wrong.”
Ms. Thompson, 34, grew up in Greenville, N.C., and is pursuing a doctoral degree. Like many liberals, she does not believe the Republicans are playing fair. “It’s like they lost the game,” she said of the governor’s race, “so now they are taking their ball and going home.”
But Ms. Thompson also sees the Republicans’ agenda as anathema to her vision of North Carolina as a hopeful beacon for a new South — a place, she said, where public education and diversity are cherished, “a place where you get Southern hospitality, but you also get a lot of progressive, forward-looking people.”
To Republicans like State Representative David R. Lewis, the liberal vision was a mess when Republicans gained power. In 2007, a former Democratic speaker of the House, Jim Black, pleaded guilty to accepting bribes from chiropractors. Republicans contend that the last Democratic governor, Bev Perdue, left the state in dire fiscal straits.
The Republicans rolled out an ambitious agenda beginning in 2013, with new abortion and voting restrictions, deep tax cuts and a school voucher program. Now even Mr. Lewis, the chairman of the House rules committee, wonders if it was too much, too soon. “I think part of the reason the reaction has been as radically negative as it has is that the Republicans, with their first opportunity to govern in a century, probably pushed our agenda a little bit faster than people were able to keep up,” he said.
North Carolinians have been battling, often bitterly, over their vision for the state for decades. The duality of North Carolina has long been definitional if a little perplexing: This is where Senator Jesse Helms perfected the art of the race-baiting, culturally conservative pitch to voters in the latter half of the last century even as the state was electing progressive, education-focused Democrats like Terry Sanford in the 1960s and Mr. Hunt, who served a total of four four-year terms between 1977 and 2001.
Through it all, however, North Carolina retained a vital political center. Like many Southern states, it was dominated by a white business elite, but there was a clearly vigorous commitment here to education and infrastructure spending that leaders in both parties thought separated them from the rest of the region.
“Terry told me if you dig below a certain level you would find some of the same instincts here that were present in our sister Southern states,” Dan Blue, an African-American state senator, said of Mr. Sanford, a longtime friend. “But people were unwilling to dig that deeply primarily because we had a business community that discouraged it.”
But the growing polarization has prompted many Democrats and even some Republicans to hope that the state’s business community will again push the state back to the political center. North Carolina’s publicity-conscious business giants have already shown a willingness to flex their muscle as they largely opposed House Bill 2.
Mr. Martin, a fixture in the Republican Party’s diminished moderate wing, said the state needed political competition now just as much as it did when he registered as a once-rare species, a Southern Republican, in 1960. “I think one-party dominance is wrong and it injures the South,” he said.
He and Mr. Hunt have linked arms to lobby for what they believe could be the most potent antidote to polarization: an overhaul of the state’s redistricting process. “Neither party has to work with the moderates now because of the way the districts are drawn,” Mr. Martin said.
What gives Democrats hope, and alarms Republicans, is that the state is becoming more ethnically diverse and heavy on voters from other states. In 1980, 75 percent of North Carolina’s voting-age population was born in the state. This year, only 54 percent of North Carolina voters were natives.
The next test for both parties will come in court-ordered special legislative elections to be held late next year, prompted by the federal court ruling that some of the Republican-drawn districts amounted to racial gerrymandering.
For now, the reality is divided government, with a governor and legislature whose initial stab at cooperation, the repeal of House Bill 2, disintegrated in a wave of recrimination. Compromise itself in an evenly divided state has become merely aspirational.
“Certainly,” Mr. Lewis said, “there ought to be some common ground in there somewhere.”