Bush Tax Cuts Key Issue in Boxer-Fiorina Race

Published Aug 14, 2010. By Rob Hotakainen.

With federal deficits at record levels, Democrats and Republicans alike are offering tax-cut plans that would add billions to the national debt next year.

Both parties say their proposals are necessary to boost a still-shaky economy. The issue is expected to come to a head when Congress returns from its summer break in mid-September.

It's already a point of contention in California's U.S. Senate race between Democratic Sen. Barbara Boxer and Republican challenger Carly Fiorina.

The trillion-dollar tax cuts signed into law by President George W. Bush in 2001 and 2003 are scheduled to expire on Jan. 1, leaving Congress with three choices: Let all or part of them expire, extend them temporarily or make them permanent.

A Republican plan would extend all of the cuts, at a cost of $238 billion in 2011, according to a study by the nonpartisan Joint Committee on Taxation this week.

A less expensive Democratic plan would extend the cuts for families making less than $250,000 a year, at a cost of $202 billion to next year's deficit, the committee said.

Many Democrats, including House Speaker Nancy Pelosi of San Francisco, want a vote before the Nov. 2 election. In the meantime, the tax talk is providing plenty of fodder for debate on the campaign trail.

Fiorina's campaign is arguing that Boxer has voted for $1 trillion in higher taxes since 1993, mainly because she voted against the Bush tax cuts.

They say her position, had it been successful, would have kept taxes higher.

Rose Kapolczynski, Boxer's campaign manager, rejects that argument, saying "Fiorina's fuzzy math doesn't add up."

The White House and many Democrats want to extend tax cuts for 98 percent of Americans and let them expire for the wealthiest 2 percent. They say the middle class drives the economy because, unlike the wealthy, they spend the additional money when they get tax cuts.

Many Republicans, who want to extend the tax cuts across the board, say it would be a mistake to raise taxes on anyone with the economy still reeling.

Both parties say they are happy to take their approach to the voters.

"If they (Republicans) want to block a tax cut for 98 percent of the American people in order to preserve a $700 billion tax cut for the wealthiest 2 percent, I'd say, 'Let's have that fight.' I can't believe at the end of the day that they would do that," said White House senior adviser David Axelrod in an interview with McClatchy Newspapers.

They would, said Senate Republican leader Mitch McConnell of Kentucky.

"We look forward to the debate over the appropriateness of raising taxes in the middle of a recession, between now and the election," he said.

But many experts say members of Congress should be careful spending money they don't have.

"To me the question is, can we afford the tax cuts to be made permanent, and my answer to that is no," said Robert Bixby, executive director of the nonpartisan Concord Coalition, a group that promotes fiscal responsibility. "My take on it is that any extension should be very short-term. But who's included, and for how long, I think are still moving parts."

If the tax cuts are not made permanent, the National Taxpayers Union wants a short-term extension as a way to provide stability for businesses, said Pete Sepp, the group's vice president.

Even though there's a strong desire by many to make all or part of the tax cuts permanent, Bixby predicted that deficit concerns will prevent that from happening.

"It really doesn't make sense," he said.

A spokesman for Boxer said she will oppose extending tax cuts for millionaires or large corporations. But she has not taken a position on any plan because she is waiting to see more specific details and whether alternative plans emerge.

Fiorina wants to make the tax cuts permanent. Her campaign argues Boxer will be backing another tax increase if she votes against an extension of the tax cuts.

But the public should look skeptically at her claim that Boxer backed higher taxes by voting against the Bush-era tax cuts, experts say. Even the Taxpayers Union, which has given Boxer failing grades for 18 consecutive years, says the senator has not backed $1 trillion in higher taxes.

"Very clearly, we would take the position that allowing tax rates to rise from their current levels constitutes an increase," Sepp said.

But he said the Fiorina campaign is "taking a snapshot back into time and projecting it forward."