Tags: Fiscal Cliff | Boehner | Cole | tax | rich

Boehner Rejects Cole's Tax Deal Stance

Wednesday, 28 Nov 2012 02:25 PM

 

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Republican unity against raising tax rates for the wealthy started showing cracks as a conservative congressman said he would back an agreement with President Barack Obama to raise rates on the rich but extend tax cuts for income below $250,000.

With Congress scrambling to forge an agreement to avoid a package of tax increases and spending cuts scheduled to kick in at the end of the year — known as the "fiscal cliff" — Rep. Tom Cole said Republicans should accept a deal that guarantees 98 percent of Americans would not suffer a tax increase that endangers the economic recovery.

"In my view, we all agree that we're not going to raise taxes on people that make less than $250,000. We should just take them out of this discussion right now, continue to fight against any rate increases, continue to work honestly for a much bigger deal," Cole, a conservative Republican from Oklahoma, told reporters.

While it is unclear how many other Republicans stand with Cole, his remarks provide hope for an eventual compromise, even if Republican congressional leaders, for now, are staying firm in their opposition to any tax rate increases as part of a fiscal cliff agreement.

Cole's stance, first conveyed privately to Republican colleagues in a meeting on Tuesday, was quickly rejected by House of Representatives Speaker John Boehner.

"I told Tom earlier ... that I disagreed with him," the top House Republican told reporters.

"You're not going to grow the economy if you raise taxes on the top two rates," Boehner said, adding Republicans would be willing to talk with Democrats about other kinds of revenue increases along with spending cuts.

Republicans have been adamant about extending the lower tax rates - enacted a decade ago under Republican President George W. Bush — for all taxpayers, including households earning more than $250,000 a year.

But with Democrats standing firm in their push to raise the top two rates on the wealthy in an effort to shrink budget deficits that have topped $1 trillion in each of the last four years, Cole's move reverberated through the Capitol.

Cole, said one senior House Republican aide, "is a pragmatist at his core. He knows which way the political winds are blowing" in his Oklahoma congressional district and in the country.

The aide added that while some in the House Republican leadership "are probably cursing his name, when all is said and done, he just may be shining a light" on what is to come in the high-stakes negotiations.

Boehner and the White House have an end-of-year deadline to avoid triggering about $600 billion in tax increases and spending cuts in January that could throw the economy back into a recession.

 

A senior Senate Democratic aide said Cole's pronouncement "seems like Act Two of Boehner trying to explain reality to the tea party."

That refers to the large number of House Republicans elected in 2010 with the support of small-government tea party activists who vehemently oppose any tax increases. Boehner will have to sell many of them on any final agreement with Obama.

Speaking to reporters at the Capitol, Boehner voiced optimism about striking a "sooner rather than later."

At the White House, Obama urged supporters to press Congress for a deal, and said he hoped to strike one before Christmas.

"Our ultimate goal is an agreement that gets our long-term deficit under control in a way that is fair and balanced," Obama said. "I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas."

With just a month left before the Bush tax cuts expire and automatic spending cuts begin to take hold, markets were anxious about predictions that falling off the "fiscal cliff" could trigger another recession.

Wall Street sharply pared losses in late morning trading following Boehner's optimistic comments on a fiscal cliff agreement. After falling nearly 1 percent on the back of weak housing data, the S&P 500 bounced back to trade near flat.

Markets are expected to continue to be highly sensitive to fiscal cliff headlines, while analysts say a lack of compromise in Washington by mid-December could trigger a selloff.

Glimmers of hope for a deal have surfaced since Obama won a second term in the Nov. 6 election, with some Republicans showing a willingness to consider revenue increases, and some Democrats easing their opposition to new savings in the costly government-run Medicare and Medicaid healthcare programs.

Obama has launched a campaign-style public relations push for his effort to raise taxes on the wealthiest Americans, and he planned to meet with executives from large companies later on Wednesday.

Many Democrats and Republicans have speculated on the possibility of a compromise that would raise income taxes on the rich, but not at the level Obama wants.

While Obama has called for letting the rates rise for those families with net incomes above $250,000, some Republican aides have said a final agreement could be a compromise with a higher threshold of say $500,000 or $1 million.

Alternatively, negotiators could look at raising the current 35 percent top rate to a higher rate but not as high as the 39.6 percent Obama wants. Obama said earlier this month at a news conference that he was "open to new ideas" on the rates.

Obama's proposal would raise about $80 billion in new revenues a year, which would go a long way toward replacing the $109 billion in harsh, across-the-board domestic spending cuts that are set to begin in 2013 unless Congress acts.

Erskine Bowles, who co-chaired the White House's 2010 deficit-reduction panel and is now working with chief executives and others to try to broker a deal, met with Republican leaders at the Capitol and said afterward that progress was being made.

"I think we will see give in all areas, if we're going to get a done. If not, we're going to go over this cliff and I think everybody realizes that would be disaster," he told reporters.

"Look, I'm not more optimistic or less optimistic. I'm hopeful, but I wouldn't put me anywhere near the optimistic category," he said. "We've got a long way to go and very few days to get it done."

© 2014 Thomson/Reuters. All rights reserved.

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