With both parties positioning for difficult negotiations to avert a fiscal crisis as Congress returns for its lame-duck session, Democrats are latching on to an idea floated by Mitt Romney to raise taxes on the rich through a hard cap on income tax deductions.
The proposal by Mr. Romney, the Republican presidential nominee, was envisioned to help pay for an across-the-board income tax cut, a move ridiculed by President Obama as window dressing to a “sketchy deal.” But many Democrats now see it as an important element of a potential deficit reduction agreement — and one they can claim to be bipartisan.
The cap — never fully detailed by Mr. Romney — is similar to a longstanding proposal by Mr. Obama to limit income tax deductions to 28 percent, even for affluent households that pay a 35 percent rate. But a firm cap of around $35,000 would hit the affluent even harder than Mr. Obama’s proposal, which has previously gotten nowhere in Congress.
“Let’s just say there’s a renewed interest,” said Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee. “Part of it is people reflecting on Obama’s proposal, but when Romney said what he said, it just added fuel.”
“I was a little surprised Romney proposed a dollar cap when he did it,” Mr. Conrad added.
The attention on the plan is evidence that ideas on deficit reduction are beginning to take firmer form as the January deadline for dealing with expiring tax cuts and automatic spending reductions draws close. The lame-duck session that begins Tuesday could be one of the most pivotal in years, and the political atmosphere is considerably different than when lawmakers left in October for the fall campaigns.
President Obama has been re-elected convincingly. Democrats, once in danger of losing control of the Senate, instead gained at least one seat. House Republicans held control, but as many as 16 incumbents lost, including some of the party’s most uncompromising voices, like Representatives Joe Walsh of Illinois and Allen B. West of Florida, who refuses to concede his seat despite his continuing deficit in the vote count. The somber mood among Republicans could ease negotiations to avert more than $500 billion in automatic spending cuts and tax increases.
“The worst time to work together on a bipartisan basis is right before an election,” said Representative Jeb Hensarling of Texas, chairman of the House Republican Conference. “The best time to work on a bipartisan basis is right after an election.”