'Buffett rule' fails, but it will be back

The Buffet rule to raise taxes on millionaires couldn't get through the Senate, but both parties promise to make it a campaign issue as the nation heads toward Election 2012. 

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    Billionaire Warren Buffett in a file photo.
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The so-called Buffett rule’s first trip into the US Senate was a well-anticipated bust.

But, Democrats and Republicans say, it may yet live on as the election season heats up, and both sides appear ready to put the measure to work.

The 51-to-45 vote meant the bill fell short of the 60 votes it needs to avoid a filibuster. It was supported by every voting Democratic senator save one (Mark Pryor of Arkansas) and was rejected by every voting Republican senator save one (Susan Collins of Maine). It would have put a minimum 30 percent federal income tax on Americans making more than $1 million annually.

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Sen. Charles Schumer (D) of New York suggested that the Buffet rule – which is named for billionaire investor Warren Buffett, who supports it – is not going away. One way to keep it alive: link the revenue raised by the proposal to other priorities.

“We’re going to come back to this issue repeatedly, and it may be tying it to what it means to people,” said Senator Schumer, the chairman of the Democratic Policy Committee, in a conference call with reporters Monday. “Forty-seven billion dollars could help pay for kids costs for college ... maybe it should to help businesses with an R&D tax credit, maybe it should go to deficit reduction."

"There are lots of ways I think the American people would prefer to spend $47 billion than tax breaks for millionaires and billionaires that aren’t paying what the average person pays,” he added.

By linking tax increases to tangible items like college costs, Democrats think they can paint Republicans as rigidly avoiding tax increases while cutting services for poor Americans.

Rep. Chris Van Hollen of Maryland, the top Democratic member of the House Budget Committee, provided a preview of the Democratic line of attack. He noted how many Republicans have signed the Americans for Tax Reform pledge, which obligates them to reject any tax increases, but have endorsed a Republican budget proposal that cuts food-stamp funding and sets up tougher restrictions on Medicaid funding.

The Buffett rule “gets at the core issue, which is this pledge that’s been signed by the overwhelming number of Republicans, saying that they refuse to ask millionaires and the wealthiest americans to contribute one penny to deficit reduction,” said Congressman Van Hollen on a conference call with reporters Monday. “And as a result, everybody else is going to get hit by their budget."

Republicans are sensitive to such critiques: The House Budget Committee is hosting a hearing on Tuesday entitled, “Strengthening the Safety Net.”

But as Democrats press their argument, Republicans, too, see ways to bend the Buffett rule to their advantage. It shows, they say, how Obama favors political games over hard decisions, and how he isn’t focused on jobs and energy prices.

Republicans say the Buffet rule, which would raise $47 billion over 10 years (if the Bush tax cuts currently set to expire at year’s end do, in fact, expire) accomplishes little. The federal deficit this coming fiscal year alone is expected to be more than $1 trillion.

“Well, President Obama looked at the options in front of him, sat down with his political advisers, and he said, ‘You know what, let’s go with the poll-tested tax increase on investment and job creation that won’t fix anything and won’t pass anyway, instead of actually doing something about the debt and the deficit,’ ” Senate minority leader Mitch McConnell (R) of Kentucky said on the Senate floor Monday.

House Republicans' immediate rejoinder to the Buffett rule is House minority leader Eric Cantor’s proposal to cut taxes for small businesses by 20 percent. That measure is slated to hit the House Thursday.

In addition, a pair of Republican energy bills are intended to knock the administration on gas prices. One would tie releases from the Strategic Petroleum Reserve to increased energy production on federal lands; the second links new Environmental Protection Agency rules to their impact on gas and diesel prices.

“In fact, the ‘Buffett Tax’ hike touted by President Obama has been called everything from a ‘sham’ to a ‘hoax’ to ‘total gimmickry,’ ” wrote House Speaker John Boehner (R) of Ohio in a Facebook post Monday morning. “Why? Because it won’t do a single thing to create jobs, address our debt, or lower gas prices.”

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