There are plenty of complexities to the fiscal talks, but the fight over expiring tax rates is pretty straightforward: President Obama wants to leave the lower rates in place on income up to $250,000, while returning to Clinton-era rates on higher incomes.
Congressional Republicans, meanwhile, want to freeze lower rates on everyone, including the wealthy, no matter how much it costs, and have threatened to allow taxes to go up on everyone unless Democrats cede to GOP demands.
A senior House Republican on Tuesday urged his party’s leadership to embrace the immediate extension of the Bush-era tax cuts for households earning less than $250,000, then fight out the fate of higher-income tax breaks later.
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.”
Cole, whom no one would fairly characterize as a moderate, added, “I don’t believe in holding the American people hostage to this debate. 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.”
There are multiple angles to this, including the fact that probably none of Cole’s far-right colleagues is likely to go along with the idea, but there’s more to the Oklahoma Republican’s suggestion than meets the eye. Indeed, Cole’s offer very likely has less to do with magnanimity and more to do with shifting the leverage in the larger fight.
Democrats generally don’t like to talk about this out loud, but if they got exactly what they’re demanding – if, in other words, the House today passed the Senate bill preserving tax breaks on income up to $250,000 – they’d suddenly find themselves in an unexpected and slightly awkward position.
Yes, they’d get nearly $1 trillion in new revenue over the next decade, without seeking a penny from the middle class, but Democrats (a) would still be short of Obama’s goal of $1.6 trillion in new revenue and with no avenues to get there; (b) would still have the sequester to fight over; (c) would have none of the stimulative measures in place they’d like to get from the fiscal talks; (d) would still have a debt-ceiling crisis on the horizon; and (e) would have lost their leverage, having already won the tax fight.
In other words, if the fight over tax rates were wrapped up this week, and Democrats got exactly what they wanted, the next round in the larger fight would begin immediately, and Obama and his allies would find themselves in a tough spot: trying to strike a deal on the sequester, the debt ceiling, and debt reduction without many cards left to play.
House Republicans will probably ignore Cole and there’s a part of Democrats that hopes they do.