Harry Reid and Nancy Pelosi want more guidance from the president on tax policy. Dems to Obama: Hang tough on taxes

When the looming battle over Bush tax cuts comes up during their meeting at the White House Thursday morning, congressional Democrats are likely to pose a simple question to President Barack Obama: What is your strategy?

House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) have already made it clear to Obama – in a conference call Monday – that they want him to establish a coherent and tough bargaining position to deal with the GOP’s united support for an extension of all tax cuts, according to House and Senate sources familiar with the call.


But on the call the president brushed aside the suggestion that his position has wavered, sources said. And his aides continue to insist that they are deftly toeing a fine political line between caving to GOP demands that all cuts be extended indefinitely and adopting such an inflexible bargaining posture that Republicans are discouraged from reasonable compromises. (See: Top governors turn against Steele)

“We are confident that Congress will act so that taxes for middle-class families will not go up at the end of the year,” White House Press Secretary Robert Gibbs told reporters on Wednesday.

Still, Obama’s repeated insistence that he would drive the hardest possible bargain – while signaling his openness to a compromise that includes a temporary extension for high-income taxpayers — has angered some in his party who claim he’s weakening Democrats’ efforts to force concessions from Republicans. (See: Shaken senators start prep for 2012)

“Give us the playbook – or even an inkling of what you want to do and how you want to do it,” said one congressional Democrat involved in crafting the tax-cut strategy.

Other Democrats were equally outspoken on Wednesday.

“The White House needs to stand firm and say we’re not giving tax breaks to billionaires in this country,” Sen. Bernie Sanders (I-Vt.) said. “Every day we hear a little differently.”

Rep. Gerry Connolly (D-Va.), who voted against adjourning the House before the election without passing a tax-cut bill, said the White House has not been clear enough about what it wants. The first mistake was putting off the debate until after Nov. 2, he said, and although Democrats still have a “window of opportunity,” it is closing. (See: Pelosi survives rebellion)

“The problem is we have two immovable objects and the White House has an opportunity to force us to some common ground,” said Connolly, a suburban Washington D.C.-area Democrat who won re-election earlier this month by fewer than 1,000 votes.

The decision by Hill Republicans to push their meeting with Obama back until Nov. 30th deprived Democrats of a crucial early chance to quickly gauge the GOP’s opening bargaining positions, several Democratic aides said.

Senate Democrats had planned to debate various approaches to a tax-cut compromise during a caucus lunch on Wednesday – including New York Sen. Charles Schumer’s plan to extend the cuts for families earning under $1 million. But that discussion, an important step in formulating a final deal, was temporarily shelved in lieu of a discussion about earmark reform, a GOP priority. (See: Pricey bills will test GOP promises)

That internal debate over the tax cuts has been rescheduled for Thursday, when members say they hope to find some consensus on which direction to go.

Sen. Evan Bayh (D-Ind.) said the proliferation of alternative Democratic proposals from the Hill “temporarily makes things more difficult, but at the end of the day, I don’t think it changes what the ultimate outcome would be” – a temporary extension of all the tax rates.

“Congress is the institution that has to act,” Bayh said. “The president can only do so much. It is this place that ultimately has to act on it.”

For his part, Gibbs says the decision to postpone the bipartisan meeting at the request of Senate Minority Leader Mitch McConnell (R-Ky.) and soon-to-be Speaker John Boehner (R-Ohio) would have no lasting impact on the possibility of a final deal. (See: Hoyer: I never eyed run vs. Pelosi)

"We're getting closer to the point at which the tax debate is going to have to get worked out," he told reporters, adding that nobody at the White House or on Capitol Hill thinks that "you are going to get a ton of stuff done that first week" of the lame-duck session.

"To judge the meeting as a failure without having had the meeting is premature," he said.

"Bipartisanship has happened," Gibbs added with a chuckle, referring to the deal struck on the Nov. 30 meeting. (See: Soros: Obama shouldn't compromise)

A larger deal, however, remains very much in doubt. The standoff between Democrats and Republicans focuses on “decoupling” the rates for the middle class from those for high-income earners.

"It will be a nonstarter with Republicans," Sen. John Thune (R-S.D.) said. "If this thing doesn't get resolved now, I think probably the first thing the House Republicans will do when they take control in January is pass a permanent extension and then send it over here and see what happens with it."

Many House and Senate Democrats want to force only one vote – on renewing the middle-class tax cuts – and dare Republicans to oppose them. They like the contrast it would offer voters. They believe it makes the most economic sense. And they know their base supports it. (See: Palin says she can defeat Obama)

But what they don’t know is whether the president would stand with them.

Gibbs would not commit to the one-vote strategy Wednesday, dodging the question by saying he'd "have to talk to the (legislative) affairs office."

White House officials say the president’s position has been crystal clear. But to some congressional Democrats, his statements have left too much wiggle room for them to feel confident about going out on a limb, aides said.

Obama says he wants to make the middle-class tax cuts permanent, but he opposes doing the same for families that earn more than $250,000. However, he says he is open to compromising with Republicans – a caveat that makes Democrats worry that the president would cut a deal that they don’t like. (See: Poll: Non-voters split over Obama)

White House senior adviser David Axelrod muddied the message last week by saying Democrats “have to deal with the world as we find it,” and that the “optimal” position of renewing only the middle-class tax cuts wasn’t realistic in the lame-duck session.

“It’s hard to predict right now how it ends this year," Thune said. "I know how it will start next year if it doesn’t end well this year."

(See: What to do on tax cuts in The Arena)