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Cracks appear in GOP's resolve on tax rates

Outwardly, Republicans are sticking to their refusal to raise tax rates for the richest Americans.
The White House and House Republicans may be closer to a deal that includes tax hikes.(AP Photo/Carolyn Kaster, File)
The White House and House Republicans may be closer to a deal that includes tax hikes.

Outwardly, Republicans are sticking to their refusal to raise tax rates for the richest Americans. But the signs are mounting that they’re slowly resigning themselves to the inevitable.

Speaker John Boehner is still saying the GOP is OK with raising new tax revenue by going after unspecified loopholes and deductions in the tax code, but that it won’t agree to allow the Bush tax cuts for high earners to expire, as Democrats are insisting on. Expiring the Bush tax cuts would raise rates for the richest 2% of Americans from 35% to 39.6%, where they were under President Clinton.

Until recently, the GOP appeared unified around that position, which was also adopted by Mitt Romney during the presidential campaign.

But in recent days, cracks in the Republican resistance have begun to show, suggesting that—with polls showing voters support the Democrat position—the GOP may be laying the groundwork to back down on the central sticking point in negotiations over how to avoid the fiscal cliff.

A GOP aide told The Washington Examiner that a member of the Republican leadership on Wednesday asked GOPers "which tax increases members could most tolerate."

That news came after Rep. Tom Cole, the GOP deputy whip and former chair of the National Republican Campaign Committee, on Tuesday urged fellow Republicans to agree “right now” to Democrats’ offer to extend the Bush cuts for the bottom 98% of taxpayers, Politico reported. Such a deal would likely scuttle the GOP's ability to insist on an extension for the top 2%.

In response, Boehner said he "disagree[s]" with Cole, and opposes hiking rates on the top 2%. And he told reporters Thursday morning: "No substantive progress has been made in the last two weeks."

But the Speaker doesn’t appear to have put the kibosh on Cole’s 98% talk. In fact, Cole has been making the rounds of cable news to reiterate his view, telling msnbc’s Chuck Todd Thursday that a tax cut extension for the 98% would be an “early Christmas present.” Could Cole be offering political cover, making it easier for Boehner—who's under pressure from the GOP's Tea Party wing not to back down—to forge a compromise?

And some prominent GOP operatives appear to be preparing to spin a Republican cave-in as a victory. Ari Fleischer, who served as President Bush’s press secretary, tweeted Wednesday: “If Pres O xtends or makes permanent Bush tax cuts, even if just for 98%, it will be a big victory for Bush.”

Brad Dayspring, a former spokesman for Rep. Eric Cantor, the number 2 Republican in the House, echoed that view, tweeting: “Looks like Pres George W. Bush is a winner of fiscal cliff deal. AT LEAST 98% of one of his signature laws preserved by Dem President.”

Bill Kristol, the editor of The Weekly Standard and an influential conservative operative, appears to have accepted reality, and doesn't expect the GOP to stick to its guns. "It won't kill the country if we raise taxes a little bit on millionaires," he mused on Fox News earlier this month, adding: "I think in the end Republicans will cave."

And of course, we’ve seen Republicans running en masse from Grover Norquist’s No Tax Hikes pledge. To be sure, Norquist has confirmed that supporting more tax revenue even through changes to the tax code, so rejecting the pledge doesn’t necessarily mean supporting higher rates. But it hardly suggests a party that’s confident in its position.

Indeed, Republicans may be realizing that they’re between a rock and a hard place. All the Bush tax cuts are set to expire at the end of the year if Congress takes no action. And polls show Americans support letting rates rise for the richest 2%, as Democrats are insisting on. That leaves the GOP with little leverage on the issue, and an incentive instead to make their stand over cuts to spending programs.

That’s certainly Cole’s view. “Our leverage here is not the tax rates, that’s actually the Democrats’ leverage,” he told Todd. “Our leverage, in my view, are the spending cuts.”