House Republicans are planning a vote today on a measure that would have been hard to imagine before the Nov. 6 election -- a tax increase for top earners, which they previously labeled as job-killing class warfare.
Efforts are deteriorating to avert more than $600 billion in tax increases and spending cuts set to start in January. Even as Republicans seek to bridge their internal divide over taxes by pairing spending reductions with House Speaker John Boehner’s plan, the White House has declared his proposal dead on arrival and warned business leaders yesterday that talks between President Barack Obama and Boehner are regressing.
Boehner is rallying Republicans around his plan to raise taxes on income exceeding $1 million as the party’s best option to strengthen his negotiating position and prevent tax increases for everyone else next month. Just seven weeks ago, the party opposed tax increases of any kind, especially the higher tax rates on income, capital gains and dividends that are in Boehner’s plan.
“It’s a different environment now,” Senator Rob Portman, an Ohio Republican, said in an interview. “The reality has shifted, and the question is what’s the best we can do for the economy and for people who are having a tough time making ends meet.”
Boehner’s support for his so-called Plan B proposal reflects the leverage that Obama gained in his re-election and a potential dilution of the Republican anti-tax brand. Organizations aligned with the party are split on the issue.
[h=2]Spending Measure[/h]Anti-tax groups including the Club for Growth and the Heritage Foundation oppose Boehner’s plan. Americans for Tax Reform, the group led by Grover Norquist, issued a statement saying that the plan didn’t violate Norquist’s anti-tax pledge without calling Plan B a good idea.
Republican leaders plan to pair the vote on Boehner’s plan with one on spending cuts in a bid for support from lawmakers wary of increasing tax rates without reducing federal programs. The spending measure resembles a bill passed in May along party lines that would cut food stamps, federal workers’ benefits and other domestic initiatives to replace $55 billion in automatic defense reductions set to take effect next month.
“Somehow we’ve lost our way,” said Representative Tim Huelskamp, a Kansas Republican who is losing his seat on the Budget Committee because of disagreements with House leaders. “It’s about core Republican, core conservative principles.”
[h=2]Trading Offers[/h]Until this week, Boehner and Obama were trading counter- offers and edging closer to a deal. A split-the-difference plan between their latest proposals would have yielded about $1 trillion each in tax increases and spending cuts.
On Dec. 17, Obama gave Boehner his latest offer, which reduced his revenue demand to $1.2 trillion from $1.4 trillion, made a concession on Social Security spending and spared households with between $250,000 and $400,000 in annual income from tax rate increases.
Boehner rejected it because Obama’s spending cuts weren’t big enough. He then started drafting his Plan B, which the White House says Obama would veto. Now, the path to a deal by the end of the year appears unclear, making a resolution less likely.
Even beyond the divide on taxes, neither a Senate-passed bill nor the House bill addresses several parts of the so-called fiscal cliff, including expiring unemployment benefits and a scheduled payment cut for doctors under Medicare.
[h=2]‘Compromise’ Needed[/h]At the White House yesterday, Obama urged Boehner to return to negotiations and said House Republicans should “take the deal,” even as he acknowledged the intra-party political challenges for Republicans who agree with the president.
“I would like to think that members of that caucus would say to themselves: You know what, we disagree with the president on a whole bunch of things,” Obama said. “We wish the other guy had won. We’re going to fight him on a whole range of issues over the next four years. We think his philosophy is all screwed up. But right now, what the country needs is for us to compromise.”
Administration officials told leaders of business and financial services groups yesterday that negotiations with Boehner had deteriorated over the past day, a person familiar with the meeting said.
The officials told the group of eight industry representatives at the White House that the Republican plan to push forward with Boehner’s alternative proposal risks pushing the government past the Dec. 31 deadline.
[h=2]‘We Won’[/h]Obama’s victory and the fact that tax cuts expire Dec. 31 unless Congress acts have combined to put Republicans in an unusual position -- offering up tax increases they don’t support as a legislative tactic.
“We have over and over and over said that we want to keep tax rates the same for everybody,” said Representative Pat Tiberi, an Ohio Republican on the tax-writing Ways and Means Committee. “We voted on that. We campaigned on that. We won.”
Mitt Romney, the Republican presidential candidate, lost, however, as did his insistence on a tax code overhaul that didn’t raise additional revenue.
If Romney had won and was preparing to take office next month, Portman said, Obama would probably have relented and agreed to the Republican plan.
[h=2]‘Taxes Go Up’[/h]Now, “if we don’t do anything, taxes go up on everybody,” Tiberi said. “It’s a false choice when you have to govern versus be pure and say whatever you want.”
The Standard & Poor’s 500 Index (SPX) lost 0.8 percent to 1,435.81. The Dow Jones Industrial Average slipped 98.99 points, or 0.7 percent, to 13,251.97. The benchmark 10-year Treasury bond yield fell one basis point, or 0.01 percentage point, to 1.8 percent at 4:06 p.m. New York time after dropping earlier to 1.77, according to Bloomberg Bond Trader prices.
Senator Rand Paul, a Kentucky Republican and co-founder of the Senate’s Tea Party caucus, said the party should stand for lower taxes, not be part of a plan that lets rates go up, even on a small fraction of taxpayers.
“I think what it ends up being is sort of an acknowledgment that we’ve been beaten,” he said in an interview.
Lawmakers in both parties said they didn’t expect today’s vote to be the beginning of any sort of fundamental shift for the party.
[h=2]‘Way Out’[/h]“They’re just looking for a way out of a box they painted themselves into,” said Representative Jim McDermott, a Washington Democrat.
Senator Johnny Isakson, a Georgia Republican, said Boehner’s proposal represented “a practical reality,” not an ideological shift.
“The president has the White House, and he has the Senate so they have a significant amount of influence on what happens, Isakson said in an interview. ‘‘With the clock running out and the reality of what happens at 12:01 a.m. on Jan. 1, then pragmatism probably takes a larger role than it has in the past.’’
To contact the reporter on this story: Richard Rubin in Washington at [email protected]
To contact the editor responsible for this story: Jodi Schneider at [email protected]
Efforts are deteriorating to avert more than $600 billion in tax increases and spending cuts set to start in January. Even as Republicans seek to bridge their internal divide over taxes by pairing spending reductions with House Speaker John Boehner’s plan, the White House has declared his proposal dead on arrival and warned business leaders yesterday that talks between President Barack Obama and Boehner are regressing.
Boehner is rallying Republicans around his plan to raise taxes on income exceeding $1 million as the party’s best option to strengthen his negotiating position and prevent tax increases for everyone else next month. Just seven weeks ago, the party opposed tax increases of any kind, especially the higher tax rates on income, capital gains and dividends that are in Boehner’s plan.
“It’s a different environment now,” Senator Rob Portman, an Ohio Republican, said in an interview. “The reality has shifted, and the question is what’s the best we can do for the economy and for people who are having a tough time making ends meet.”
Boehner’s support for his so-called Plan B proposal reflects the leverage that Obama gained in his re-election and a potential dilution of the Republican anti-tax brand. Organizations aligned with the party are split on the issue.
[h=2]Spending Measure[/h]Anti-tax groups including the Club for Growth and the Heritage Foundation oppose Boehner’s plan. Americans for Tax Reform, the group led by Grover Norquist, issued a statement saying that the plan didn’t violate Norquist’s anti-tax pledge without calling Plan B a good idea.
Republican leaders plan to pair the vote on Boehner’s plan with one on spending cuts in a bid for support from lawmakers wary of increasing tax rates without reducing federal programs. The spending measure resembles a bill passed in May along party lines that would cut food stamps, federal workers’ benefits and other domestic initiatives to replace $55 billion in automatic defense reductions set to take effect next month.
“Somehow we’ve lost our way,” said Representative Tim Huelskamp, a Kansas Republican who is losing his seat on the Budget Committee because of disagreements with House leaders. “It’s about core Republican, core conservative principles.”
[h=2]Trading Offers[/h]Until this week, Boehner and Obama were trading counter- offers and edging closer to a deal. A split-the-difference plan between their latest proposals would have yielded about $1 trillion each in tax increases and spending cuts.
On Dec. 17, Obama gave Boehner his latest offer, which reduced his revenue demand to $1.2 trillion from $1.4 trillion, made a concession on Social Security spending and spared households with between $250,000 and $400,000 in annual income from tax rate increases.
Boehner rejected it because Obama’s spending cuts weren’t big enough. He then started drafting his Plan B, which the White House says Obama would veto. Now, the path to a deal by the end of the year appears unclear, making a resolution less likely.
Even beyond the divide on taxes, neither a Senate-passed bill nor the House bill addresses several parts of the so-called fiscal cliff, including expiring unemployment benefits and a scheduled payment cut for doctors under Medicare.
[h=2]‘Compromise’ Needed[/h]At the White House yesterday, Obama urged Boehner to return to negotiations and said House Republicans should “take the deal,” even as he acknowledged the intra-party political challenges for Republicans who agree with the president.
“I would like to think that members of that caucus would say to themselves: You know what, we disagree with the president on a whole bunch of things,” Obama said. “We wish the other guy had won. We’re going to fight him on a whole range of issues over the next four years. We think his philosophy is all screwed up. But right now, what the country needs is for us to compromise.”
Administration officials told leaders of business and financial services groups yesterday that negotiations with Boehner had deteriorated over the past day, a person familiar with the meeting said.
The officials told the group of eight industry representatives at the White House that the Republican plan to push forward with Boehner’s alternative proposal risks pushing the government past the Dec. 31 deadline.
[h=2]‘We Won’[/h]Obama’s victory and the fact that tax cuts expire Dec. 31 unless Congress acts have combined to put Republicans in an unusual position -- offering up tax increases they don’t support as a legislative tactic.
“We have over and over and over said that we want to keep tax rates the same for everybody,” said Representative Pat Tiberi, an Ohio Republican on the tax-writing Ways and Means Committee. “We voted on that. We campaigned on that. We won.”
Mitt Romney, the Republican presidential candidate, lost, however, as did his insistence on a tax code overhaul that didn’t raise additional revenue.
If Romney had won and was preparing to take office next month, Portman said, Obama would probably have relented and agreed to the Republican plan.
[h=2]‘Taxes Go Up’[/h]Now, “if we don’t do anything, taxes go up on everybody,” Tiberi said. “It’s a false choice when you have to govern versus be pure and say whatever you want.”
The Standard & Poor’s 500 Index (SPX) lost 0.8 percent to 1,435.81. The Dow Jones Industrial Average slipped 98.99 points, or 0.7 percent, to 13,251.97. The benchmark 10-year Treasury bond yield fell one basis point, or 0.01 percentage point, to 1.8 percent at 4:06 p.m. New York time after dropping earlier to 1.77, according to Bloomberg Bond Trader prices.
Senator Rand Paul, a Kentucky Republican and co-founder of the Senate’s Tea Party caucus, said the party should stand for lower taxes, not be part of a plan that lets rates go up, even on a small fraction of taxpayers.
“I think what it ends up being is sort of an acknowledgment that we’ve been beaten,” he said in an interview.
Lawmakers in both parties said they didn’t expect today’s vote to be the beginning of any sort of fundamental shift for the party.
[h=2]‘Way Out’[/h]“They’re just looking for a way out of a box they painted themselves into,” said Representative Jim McDermott, a Washington Democrat.
Senator Johnny Isakson, a Georgia Republican, said Boehner’s proposal represented “a practical reality,” not an ideological shift.
“The president has the White House, and he has the Senate so they have a significant amount of influence on what happens, Isakson said in an interview. ‘‘With the clock running out and the reality of what happens at 12:01 a.m. on Jan. 1, then pragmatism probably takes a larger role than it has in the past.’’
To contact the reporter on this story: Richard Rubin in Washington at [email protected]
To contact the editor responsible for this story: Jodi Schneider at [email protected]