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Income Gap Takes the Spotlight

Reassured by recent polling data on the public’s anger over rising income inequality, Senate Democrats will continue to push for tax increases on the wealthy to offset aid to the middle class — an issue they believe will help define the 2012 elections.

But the strategy is unlikely to lead to passage of any legislation in the near future because Republicans have shown no signs that they feel any public pressure to change their stance that raising taxes on the wealthy would hamper job creation.

“We are going to keep at this,” Sen. Charles Schumer (N.Y.), who heads the Senate Democratic Policy and Communications Center, said in an interview Monday. “We are going to keep at the payroll tax cut, and we are going to continue to put other jobs measures, as well as measures that help reduce income inequality, on the floor.”

With more Americans beginning to believe that government policies favor the wealthy, Schumer recently asked Democratic pollster Geoff Garin to draft a memo on the income gap. Garin’s memo cites several polls, including a recent NBC-Wall Street Journal poll in which 60 percent of respondents strongly agreed that America’s economic imbalance comes from policies that favor the rich over the rest of the country. Additionally, 55 percent said income inequality is a significant problem in the country.

“From the perspective of policy, there is a huge gap between what the public wants the government to do and the positions of the Republican Party on those issues,” the memo said. “For 2011, the electoral importance of these findings is that the public has a clear understanding that, at a time when the rich are doing well and everyone else is struggling, the Republicans have aligned themselves squarely with those at the very top.”

On the Senate floor Monday, Minority Leader Mitch McConnell (R-Ky.) said Democrats have been transparently political in their “jobs” legislative agenda, and he added that Democrats should take up a series of job creation bills passed by the Republican-led House.

“It’s no secret that many people at the White House and a number of Democrats here in the Senate would rather spend their time designing legislation to fail in the hopes of trying to frame up next year’s election,” McConnell said, adding that trying to stimulate the economy with more government spending has not worked.

“As I’ve pointed out again and again, the House has been busy all year passing bipartisan jobs bills just like these that we could rally around in a sign of unity and common concern for the millions of Americans who are looking for jobs,” McConnell said.

Democrats, who control 53 Senate votes, have repeatedly failed to win the 60 votes needed to cut off debate when they previously have attached a millionaires’ tax to other jobs legislation, including those intended to keep teachers and first responders on the job and to increase infrastructure funding.

But Schumer said he believes public pressure and Senate Democratic tactics will eventually lead to legislative results.

“I think it will help politically, but I think it will also get results before the 2012 election,” Schumer said.

The first test likely will come on expanding President Barack Obama’s payroll tax cut plan. Senate Democrats will try to bring to the floor, possibly this week, a bill sponsored by Sen. Bob Casey (D-Pa.) that would reduce the payroll tax rate for employees to 3.1 percent for 2012, as well as reduce it for employers. The $255 billion cost of the measure would be offset by a tax on those making more than
$1 million a year.

The payroll tax, which funds Social Security, is normally 6.2 percent, but Congress lowered the rate for workers in 2011 to 4.2 percent. That tax break is set to expire Jan. 1.

Casey’s bill is unlikely to pass given Republican opposition, but Senate Majority Leader Harry Reid (D-Nev.) said in a conference call with reporters Monday that he intends to hold up to three votes on the payroll tax cut, possibly with other offsets and possibly without a pay-for that prevents it from adding to the deficit.

Schumer noted that many Republicans supported a recent bill that provides tax incentives for hiring veterans. The proposal, which was signed into law, was part of Obama’s $447 billion jobs package.

“We thought they wouldn’t pass any of our jobs measures, and they did pass one — the veterans one,” Schumer said.

Schumer acknowledged that the veterans jobs legislation — which also included a Republican-friendly repeal of a requirement that federal, state and local governments withhold 3 percent of nearly all of their contract payments beginning in 2013 — was the product of a negotiation and that Democrats would not rule out lowering their goals by settling for a simple extension of the current payroll tax break.

“We don’t mind negotiating,” Schumer said, though he prefers Obama’s expansion. “I think, at the end of the day, they are going to have to allow the payroll tax to [at least] remain in effect,” Schumer added. “Its just too heavy a load for them to resist, particularly after spending so much time defending tax breaks for people who make above a million dollars.”

His comments came as the White House signaled that it, too, was open to negotiating with Republicans to pass Obama’s proposed payroll tax cut and other jobs measures.

However, a senior administration official said Monday that the automatic spending cuts triggered by the failure of the super committee to reach a deal would be “off limits.” Obama has said he would veto legislation seeking to roll back the $1.2 trillion in automatic cuts, nearly half of which would come from the Defense Department.

Steven T. Dennis contributed to this report.

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