GOP may set stage for later tax fight
middle-class tax cuts. Then they would resume the fight over spending and taxes as the nation approaches the next hard deadline: its statutory borrowing limit, which could be reached in late January or February.
“There’s always better ground, but you have to get there,” said Rep. Michael Burgess, R-Texas, who made it clear he does not support allowing any taxes to rise.
Sen. Olympia Snowe of Maine, who is retiring, joined a handful of other Republicans on Tuesday suggesting that Congress should pass the middleclass tax cut extensions now, then leave the fight over taxes and spending until later. Americans, she said, “should not even be questioning that we will ultimately raise taxes on low- to middle-income people.” Congress could take that off the table “while you’re grappling with tax cuts for the wealthy,” she said.
But any move toward compromise with Democrats on fiscal issues has come under attack from conservatives as a surrender.
It is a dynamic that has haunted Speaker John Boehner throughout the 112th Congress. Boehner, of Ohio, drew fire this week for seeking to enforce party discipline by removing from their preferred committee seats a handful of House Republicans who have defied party leaders.
Obama made clear Tuesday in an interview with Bloomberg News that he was not going to budge on raising tax rates on income over $250,000. “We’re going to have to see the rates on the top 2 percent go up,” Obama said, “and we’re not going to be able to get a deal without it.”
The prospect of allowing an extension only of the middle-class tax cuts is just one possibility, and Congress may never reach it if there is a broader agreement or if another alternative can be found. It would be a bitter pill for Republicans to swallow since they have repeatedly called for an extension of all the expiring tax cuts, saying any increases could harm the economy.
But Republicans also know they have a problem: Many liberal Democrats, believing they are in a position of strength after the elections, are more than willing to avoid compro- mising with them and wait for the expiration of the Bush tax breaks at the end of the year and the automatic across-theboard budget cuts, which would disproportionately affect the military.
“It’s a terrible position because by default, Democrats get what they want,” said Rep. James Lankford, R-Okla., who acknowledged his party is boxed in.
But if the dispute reaches that point, the tables could turn. Many conservative Republicans say that if Congress refuses to cut spending, they are willing to refuse to raise the debt ceiling, letting the nation default on its loans. If the tax rate fight is already resolved by the time the debt-limit increase is needed, Democrats will find themselves without the leverage they now have with the pending expiration of the lower tax rates.
That is why in his opening bid to end the fiscal standoff, Obama proposed a permanent policy change to let the president raise the nation’s borrowing limit on his own — and why Sen. Mitch McConnell, the Republican leader, reportedly laughed out loud at the idea.
Boehner took as much fire from conservatives as from Democrats after proposing a deficit-reduction plan that would raise $800 billion in tax revenue over 10 years. Conservative advocacy groups and conservatives on Capitol Hill were united in their condemnation.
“One party proposes 800 billion in tax increases. In an effort to counter them and continue to be the ‘low tax, small government’ party, the other party’s leadership proposes … wait for it … 800 billion in tax increases,” Sen. Rand Paul, R-Ky., said on his Facebook page.