Dems divided over how to deal with taxes

From the left wing Talking Points Memo:

At an undisclosed White House meeting yesterday with Senate Democratic leaders, President Obama pushed back on a controversial, but politically potent tax cut plan that has knocked Republicans off message in recent days.

Pushing hardest for the new approach was Sen. Chuck Schumer (D-NY), the third ranking Democrat in the Senate and the Dems' new point man for combining message and policy. He proposes to create a new tax bracket above the $1 million income threshold, and let Republicans decide whether to fight to the death to give those people a tax cut. It's the one compromise that polls well and wrongfoots the GOP at the same time. . . .

But Democratic leaders (other than Schumer) and Obama himself oppose the plan for a few reasons. At the meeting yesterday, according to a source familiar with the discussions, "the concerns expressed were about the cost [to the deficit] and the risk of redefining the middle class as those making over one million."

(Estimates suggest that lifting the threshold from $250,000 to $1 million could cost as much as $400 billion over 10 years.)

A Senate Democratic aide said that, for these reasons, the idea hasn't really gained wide traction in the caucus. And a third source noted that a number of progressive members don't want to start negotiations by giving up what they really want: a vote to let the Bush tax cuts expire above a threshold of $250,000 a year.

Sensing that that $250,000 goal is already out of reach, supporters of Schumer's proposal worry that if Democrats don't coalesce around something soon, they'll end up agreeing to extend all the Bush tax cuts until 2012. . . .