Sunday, November 05, 2006

Should They Win Control of Congress, the Democrats Have a Plan

The New York Times
Should They Win Control of Congress, the Democrats Have a Plan

WASHINGTON, Nov. 3 — Republicans like to say that Democrats have no ready agenda should they seize power in Congress, save for one particular piece of business.

“If they get control of the House and the Senate, they’re going to run up your taxes,” President Bush warned a crowd in Nevada on Thursday.

But Democrats say Republicans have it wrong on both counts. They say they are prepared to move on a package of legislation and rules changes in the first 100 hours Congress is in session next year, should they take control of the House or Senate. And they promise to pursue a broader long-term program that touches on national security, health care, employment, energy and education.

They say it is Mr. Bush and Congressional Republicans who are enacting a back-door tax increase by failing to fix the alternative minimum tax, which is hitting more middle-income families.

“Democrats are offering a new direction for America that will provide real tax relief to middle-income families, spur economic growth that will produce good-paying American jobs, and we will do it in a fiscally responsible way,” Representative Nancy Pelosi of California, the minority leader who would become speaker in a Democratic-controlled House, said on Friday. “And Democrats will ensure that strong economic growth benefits all Americans, not just the privileged few.”

Republicans say the Democratic approach would force tax increases, since the party is proposing to increase spending while also imposing so-called “pay-go” budget rules that would require most new spending to be offset by a new source of revenue, not added to the federal deficit.

“You have their social agenda, which involves a lot of new money,” said Representative John A. Boehner, Republican of Ohio and the current majority leader. “Secondly, they want to institute pay-go rules. If you put the pay-go rules in and you increase spending, the only answer is raise taxes.”

Democrats, many of whom opposed Mr. Bush’s push to lower tax rates on investment income, say they can find other ways to pay for their programs, like a greater effort to collect billions of dollars in unpaid taxes. They also say they intend to produce savings by initiating negotiations with drug companies to lower Medicare prescription costs and by eliminating some subsidies for the oil and gas industry.

“Despite the president and the Republicans saying we will raise taxes, that is not what we will do,” said Brendan Daly, a spokesman for Ms. Pelosi.

Ms. Pelosi has outlined a plan to move quickly on pet Democratic initiatives as soon as Congress convenes in January if her party holds the majority. They include legislation to enact all the antiterrorism initiatives recommended by the Sept. 11 commission, increase the minimum wage to $7.25 per hour, allow the government to negotiate Medicare prescription drug prices, eliminate some corporate subsidies for the oil industry, cut in half the interest rate on federally subsidized college loans and impose new restrictions on dealing with lobbyists.

Some of those proposals are also elements of the Democratic “Six for ’06,” the shorthand for the party’s longer-term agenda.

Under that plan, Democrats would push for new policies in Iraq, including beginning the withdrawal of troops for deployment elsewhere. They would also seek to double special forces devoted to pursuing Osama bin Laden and others in terrorism networks, institute screening of all cargo containers entering the country and increase spending on the National Guard and emergency workers.

Democrats say they would also prohibit any increase in Congressional pay until the minimum wage was raised and eliminate tax breaks that encourage companies to move jobs out of the country. They would make permanent an expired tax deduction for college tuition costs; encourage alternative energy production; renew the push for expanded stem cell research and enact new incentives for personal saving.

Republicans say that such initiatives do not come cheap and that Democrats will have to resort to tax increases to find the money. And Mr. Bush, Vice President Dick Cheney and Congressional Republican leaders have repeatedly pointed out that Democrats can increase taxes simply by allowing some of the tax cuts enacted in 2001 and extended over some Democratic objections to expire.

Those assertions set off a row this week with Representative Charles B. Rangel of New York, who would become the new chairman of the Ways and Means Committee in a Democratic-led House. Mr. Rangel and his advisers say that given the likelihood of small margins between the two parties in the House and Senate, any tax legislation would have to be done in concert with the White House and Republicans.

“Regardless of who is in control next year,” Mr. Rangel said Tuesday, “Democrats and Republicans are going to have to come together. Congress will have to work with the administration to provide real tax relief for middle-income families and find solutions to issues like Social Security and tax reform.”

Democrats also say that most of the tax cuts do not expire until 2010 and that any action will depend on the economic climate and the federal budget situation. And they say Democrats strongly support many of the most popular tax breaks, including a higher child tax credit and elimination of the so-called marriage penalty.

As for the lower rates on stock dividends and capital gains, John Buckley, tax counsel for Mr. Rangel, said, “If the budget is good, who knows what happens in 2010. If the budget is not, then all sides are going to have to look at this.”

Mr. Buckley said Democrats wanted a permanent fix in the alternative minimum tax, which was initially established to make certain that affluent Americans with significant deductions did not escape taxes altogether, but which is now reaching a growing number of upper middle-income earners. He said the creeping alternative tax is reducing the benefits of the Bush tax cuts for Americans who fall under it.

“The president has accused us of increasing taxes without lifting a finger,” Mr. Buckley said. “But his budget does not include any A.M.T. relief, so he is increasing taxes without lifting a finger.”