GOP may set stage for later tax fight

Bud­get

Austin American-Statesman - - THE SECOND FRONT - Con­tin­ued from A

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.

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