Former budget director Peter Orszag

Former budget director Peter Orszag J. Scott Applewhite/AP

Discharge petition for extending tax cuts draws 178 Democrats

Former Obama budget chief calls for continuing middle-class breaks only temporarily.

As the drama continues over the looming fiscal cliff, House Democrats have made headway in their parliamentary tactic of forcing a House vote on a bill to extend tax cuts to all but the wealthiest Americans. Separately, on Thursday, the former Obama administration budget director endorsed a two-year limit on the current Democratic plan to extend the George W. Bush-era tax cuts for the middle class.

As House Minority Leader Nancy Pelosi vowed earlier in the week, Democrats acting through Rep. Timothy Walz, D-Minn., on Tuesday introduced the rarely used tool of a discharge petition. If 218 members sign on, then a bill stuck in committee must come to a floor vote.

As of Thursday morning, 178 Democrats had signed the petition to require the Ways and Means committees to report out the Middle-Class Tax Cut Act (H.R. 15), introduced in July by ranking member Sander Levin, D-Mich., after a similar bill passed the Senate. The Democratic caucus is currently at 191.

No Republicans have signed on, though Rep. Walter Jones, R-N.C., told The Hill that he is flirting with signing the petition next week if talks between the White House and congressional leaders appear stalled.

Despite their desire to protect the middle and working classes from tax hikes, Democrats should not rule out letting the 2001 and 2003 cuts expire for those groups after two years if additional revenues are needed, according to Citigroup vice president Peter Orszag, Obama’s first budget director who previously led the Congressional Budget Office.

On a Thursday conference call with reporters staged by the liberal-leaning Center for Budget and Policy Priorities, Orszag affirmed that he agreed with center head Robert Greenstein that deficit reduction needs should prompt a two-year limit on Obama’s plan to extend tax cuts for 98 percent of Americans. “I have concerns about affordability,” Greenstein said.

Both commentators criticized current Republican proposals to avoid raising tax rates on those earning $250,000 or more by relying instead on revenue that might be gained by reforming the tax code to eliminate some popular deductions or capping each taxpayer’s overall use of deductions.

One reason such proposals are “artificially attractive is their vagueness,” Orszag said. “No one knows which deductions get scaled back,” preventing critics from “attacking the provisions directly. It’s misleading.”

Greenstein says capping deductions “should be a supplement, rather than a substitute” for raising tax rates on the upper-income groups and could be part of much-needed longer-term reforms. His group favors converting many deductions to credits, which spreads their benefits across the tax brackets.

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