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Why The Tax Fights Actually Matter Why The Tax Fights Actually Matter

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Leadership

Why The Tax Fights Actually Matter

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(AP Photo/J. Scott Applewhite)

My colleague Nancy Cook has an excellent take down this morning of how the previous two weeks of congressional fights over taxes -- although mostly symbolic votes -- actually contained loads of hints about what will go down in the lame duck.

Her first point: that both parties believe they have the upper hand going into the lame duck. Cook writes, "If there was anything on display over the last two weeks, it was the two parties celebrating their self-perceived victories and their confidence:"

The Democrats think they're winning the tax battle (and subsequently believe they'll kick butt in the lame duck) because they got both the Senate and House to coalesce around the White House's tax message. The chairman of the Senate Finance Committee, Max Baucus, D-Mont., beat the chairman of the House Ways and Means Committee, Dave Camp, R-Mich., to the punch by passing a bipartisan tax-extender package out of committee (even if it's not going to the floor anytime soon). That could become a template for the discussion of the business tax breaks moving forward.

[snip]

The Republicans similarly believe they have all the leverage. They won a House vote to extend the Bush-era tax cuts for another year by a wide margin. They argue that an extension would boost economic confidence by giving greater certainty to individuals and businesses. That's also a viewpoint buttressed by a much-discussed Congressional Budget Office report that said that extending tax cuts and putting off the sequester would lead to growth in GDP of 4.4 percent in 2013, in addition to the creation of 2.3 million jobs.

And, if the unemployment rate remains high and the monthly job numbers dismal, the Republicans can blame that on Democrats at the end of the year--much as they did during the 2010 lame duck when President Obama felt compelled to extend the Bush-era tax cuts for two years given the fragile state of the economy. It could be déjà vu, in their minds.

The other three reasons why these tax fights matter: the parties are on the same page as their presidential candidates, data is the new hot commodity and tax reform is politically popular. 

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