May 28, 2023

House Republican Urges Party to Yield on Tax Cuts for Most Earners

In a private meeting of the House Republican whip team, the group responsible for vote counting, Representative Tom Cole of Oklahoma broke with the rest of the leadership and said the party should join with President Obama for now, Republican aides said. The meeting was first reported by Politico.

“The first thing I’d do is make sure we don’t raise taxes on 98 percent of the American people,” he said in an interview Tuesday night. “We’ll get some credit for that, and it’s the right thing to do.”

The break came after senior Democrats hardened their line on conditions for a deal to head off the automatic spending cuts and tax increases set to kick in this January. Democrats said Tuesday that Mr. Obama would not accept any deficit reduction deal that did not include a long-term extension of the debt ceiling, possibly ensuring that Mr. Obama would not have to deal with another debilitating fiscal showdown for the remainder of his presidency.

Senator Harry Reid of Nevada, the Democratic leader, and Senator Richard J. Durbin of Illinois, the No. 2 Democrat, both said they did not intend to complete a major deficit reduction deal only to have Republicans reopen it each time the government bumped up against its statutory borrowing limit.

“We would be somewhat foolish to work on something on stopping us from going over the cliff, and a month or six weeks later, the Republicans pull the same thing they did before and say, ‘We’re not going to do anything unless this happens or we don’t increase the debt ceiling,’ ” Mr. Reid said. “I agree with the president. It has to be a package deal.”

The stern posture may throw another roadblock in the way of a deal before January, when hundreds of billions of dollars in automatic spending cuts and tax increases kick in, possibly sending the economy back into recession. Conservative Republicans have said they want the debt ceiling left out of any deal to maintain leverage on Washington to keep trimming the deficit.

But the position taken by Mr. Cole suggested Republicans could be softening. An extension of the middle-class tax cuts would significantly diminish, or erase, any leverage Republicans might have to preserve tax cuts for more affluent households and some small businesses. But the leadership’s political position will grow even more tenuous if prominent Republicans like Mr. Cole say it is time for a quick deal that would preserve the tax breaks of 98 percent of households and 97 percent of small businesses.

“I don’t believe in holding the American people hostage to this debate,” Mr. Cole said. “Let’s get what we can now, then go back and try to get the rest. Where there is common ground with the president, we should seize that common ground.”

Democrats on Tuesday laid out a series of demands that either showed confidence in the flexibility of defeated Republicans or indicated a brewing stalemate. Senator Max Baucus of Montana, chairman of the Senate Finance Committee, flatly rejected a Republican proposal to cap tax deductions and credits at $25,000 a household instead of allowing tax rates to rise.

“I just want to point out a $25,000 cap will mean about a quarter of those who will pay more taxes will not be wealthy Americans but middle-income Americans,” Mr. Baucus said. “When that’s fully understood I think the interest in that is going to wane.”

Mr. Durbin said the president would also demand a guarantee that the spending caps in any deal be adhered to and not reopened. Last year, Congress and the president agreed to 10 years of domestic spending caps as part of the deal to raise the debt ceiling, only to see House Republicans try to impose lower spending levels six months later.

Democrats said they would not accept cuts to Medicare or Medicaid as part of the upfront “down payment” on deficit reduction that would be passed next month along with a broader framework on tax and entitlement changes to be worked over in 2013.

In a speech at the liberal Center for American Progress, Mr. Durbin still expressed confidence that beneath all the public posturing, the White House and Speaker John A. Boehner, Republican of Ohio, were making progress toward averting the so-called fiscal cliff.

Mr. Durbin’s speech itself was a measure of conciliation, laying out the case to liberals for a major deficit deal. He made clear that the parties agreed on what a final deal would look like: an initial deficit-reduction down payment to calm financial markets and avoid most of the fiscal jolt that would otherwise hit in January; instructions to Congressional committees to draft tax, spending and entitlement legislation to save around $4 trillion over the next decade; and some form of fallback deficit plan in case Congress fails to pass those changes.

Mr. Durbin said that Medicare should not be tapped for that upfront down payment but that federal health care programs should be part of next year’s deliberations. And he opened the door for money-saving adjustments to Mr. Obama’s signature health care law, so long as it was not gutted or repealed.

The Democrats’ firm position on the debt ceiling was expected by Republican leaders, who went through a near-crisis in 2011 when House conservatives refused to raise the borrowing limit, nearly sending the federal government into default. The government will reach its borrowing limit again early next year. Kevin Smith, a spokesman for Mr. Boehner, said that regardless of how that looming deadline was dealt with, the speaker would insist on his own rule: any increase in the debt ceiling must be accompanied by spending cuts of at least the same magnitude.

Jackie Calmes contributed reporting.

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