Hoyer: Dems’ ‘fiscal cliff’ threat different than last year’s Republican default ploy

Democratic threats to allow the country to go over the “fiscal cliff” in January are decidedly different from the GOP’s threats to allow the country to default, Rep. Steny Hoyer (D-Md.) argued Tuesday.

Sen. Patty Murray (D-Wash.) warned Monday that Democrats would let a long list of spending cuts and tax increases — the so-called fiscal cliff — take effect next year if Republicans insist on extending lower tax rates for the wealthiest Americans.

{mosads}The threat of going over the fiscal cliff — which some experts say could send the country back into recession — takes a page from the Republicans’ 2011 vow to allow the country to default if more spending cuts were not attached to legislation raising the debt ceiling.

But Hoyer, the Democratic whip, said Tuesday that the circumstances are different. Last year’s debate over the debt ceiling hinged on clear disputes between the parties over spending cuts, he argued, while this year’s tax-cut debate features agreement from both sides that middle-income Americans should not face a tax hike amid a still-fragile economy.

“They are not analogous situations,” Hoyer told reporters in the Capitol. “We’re … saying, ‘Let’s get an agreement [on an issue] about which we have agreement.’ “

Hoyer stipulated that he hasn’t read Murray’s speech in detail, but added: “So what Sen. Murray is clearly saying is that, ‘Look, we essentially have an agreement. You don’t want taxes to go up on those earning [under] 250 [thousand dollars], and for the most part, we don’t either.

“And I think we could get an overwhelming vote for that.”

At issue is the question of how to approach the Bush-era tax rates, which will go up for all income levels on Jan. 1. Behind President Obama, Democrats want to extend the lower rates for families with annual taxable income below $250,000, while Republicans want to extend the lower rates for everyone.

Murray sparked a firestorm in Washington Monday when, speaking at the Brookings Institution, she said Democrats are ready to let the “fiscal cliff” issues go unresolved if Republicans don’t compromise on the Bush tax rates.

“Unless Republicans end their commitment to protecting the rich above all else,” she said, “our country is going to have to face the consequences of Republican intransigence.”

Ben Bernanke, chairman of the Federal Reserve, pushed back against that move Tuesday, warning lawmakers that a failure to address the fiscal cliff issues could harm the economy.

“[F]iscal decisions should take into account the fragility of the recovery,” Bernanke told members of the Senate Banking Committee. “That recovery could be endangered by the confluence of tax increases and spending reductions that will take effect early next year if no legislative action is taken.”

Republicans were quick to pounce, accusing Democrats of threatening the economy to secure passage of partisan policies.

“Has it come to this, that Democrats are willing to hurt jobs and tank our economy for the sake of a small business tax hike that would also have disastrous consequences?” House Speaker John Boehner (R-Ohio) asked.

Still, it wasn’t long ago that Republicans were threatening the economy as leverage to ensure passage of their own partisan bills.

Boehner last year, for instance, conceded that a failure to hike the nation’s debt limit would harm the world economy and kill domestic jobs. Still, he said it was worth the price to secure more federal spending cuts.

“Not raising the debt limit would have serious, very serious, implications for the worldwide economy and jobs here in America,” Boehner told Fox News amid that debate. “But having said that, we’re just not going to do the typical Washington thing — roll over, increase the debt limit — without addressing the underlying problems.”

Hoyer on Tuesday amplified Obama’s argument that the top two problems concerning Americans are high unemployment and soaring deficits — issues he said are both addressed by the Democrats’ plan to extend tax cuts only on incomes below $250,000.

The Maryland Democrat rejected the warnings that ending the tax breaks on the wealthiest Americans would kill jobs, noting that the economy under former President Clinton soared even as all income levels paid higher rates.

“It seemed to be a pretty good time,” Hoyer said. “So the experience that we saw does not seem to validate [the warnings].”

Hoyer also used Tuesday’s podium to call on GOP leaders to raise the debt ceiling again soon, warning that too much delay would create economic “uncertainty” detrimental to hiring.

“I would urge Mr. Boehner not to use this as a leveraging tool and not to put at risk the credit-worthiness of the most credit-worthy nation on earth,” he said.