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Boehner seeks support for tax increase on the wealthiest

The House speaker wants a vote Thursday to raise rates on households making more than $1 million a year. The Obama administration is skeptical that a 'grand bargain' to avert the 'fiscal cliff' is still possible.

December 19, 2012|By Lisa Mascaro, Christi Parsons and Michael A. Memoli, Washington Bureau
  • House Speaker John A. Boehner says that after his plan passes, President Obama “can call on Senate Democrats to pass that bill, or he can be responsible for the largest tax increase in American history.”
House Speaker John A. Boehner says that after his plan passes, President… (Mark Wilson, Getty Images )

WASHINGTON — As President Obama and House Speaker John A. Boehner took turns blaming each other for the sudden lull in the budget talks, the action continued off-camera Wednesday as the Ohio Republican focused on building support from his conservative majority to increase tax rates on the wealthy.

Boehner faces a potentially insurmountable challenge: Even though Republican leaders are all but resigned that the top tax rates will have to rise in the new year, the party's rank-and-file House members are not.

That the speaker is even attempting to get his troops comfortable with putting their names on a tax increase is a major turnabout from a few weeks ago.

Boehner hopes to have a House vote Thursday on legislation that would raise taxes on households earning more than $1 million a year and extend lower rates for all other taxpayers. Taxes across all incomes will rise in the new year if nothing is done.

Conservatives railed against Boehner's proposal, which he calls Plan B, as an affront to the party's core values, but Boehner received a crucial lifeline Wednesday from Grover Norquist. The influential anti-tax activist's Americans for Tax Reform said voting for the measure would not violate the pledge most GOP lawmakers had taken not to raise taxes.

Thursday's House vote will be "tough sledding," as one veteran lawmaker put it, and the outcome is uncertain. But win or lose, Boehner is expected to resume talks with Obama once the theatrics are finished.

"One of two things will happen — either the vote fails, and the speaker has to return to the negotiating table with the president with an even weaker hand," said Sen. Charles E. Schumer (D-N.Y.). "Or the vote passes narrowly, which would only prove that rank-and-file Republicans in the House have become comfortable with a rate increase on the wealthy," making it "easier to pass a grand bargain through Congress."

At the White House, advisors to the president were skeptical that a big deficit reduction deal remained possible, saying Boehner's plan had taken energy out of the speaker's talks with the president. The two men have not spoken since Monday evening, when Boehner told Obama he was peeling off to pursue this alternative.

"It is very hard for them to say yes to me," Obama said in a rare appearance in the White House briefing room. "But at some point, they've got to take me out of it and think about their voters, and think about what's best for the country."

Hours later, from the speaker's balcony at the Capitol, came Boehner's terse reply — and confident assertion that he had the votes to pass the bill.

"And then the president will have a decision to make," Boehner said. "He can call on Senate Democrats to pass that bill, or he can be responsible for the largest tax increase in American history." Boehner did not take questions.

The window for a deal is narrowing, with tax rates set to increase Jan. 1 and broad government spending cuts to begin a day later.

With the Senate pausing to mourn Sen. Daniel K. Inouye (D-Hawaii), a World War II veteran who was the first Japanese American elected to Congress, the schedule is even tighter. Many senators will fly to Hawaii over the weekend for a memorial service.

As Republicans rounded up votes Wednesday, House Minority Leader Nancy Pelosi (D-San Francisco) ducked out of the Democrats' holiday party to announce that her colleagues would hold firm against Boehner's plan. And the White House announced it would veto the bill if necessary.

Without Democratic support, the outcome of Boehner's vote will show whether Republicans are willing to compromise on a budget plan that would include higher tax rates.

Boehner has calculated that passing a House bill before lawmakers take a few days off for Christmas would shift the pressure to Obama to make the next move, presumably through legislation in the Senate.

Some believe the speaker's gambit has already succeeded in pushing the White House toward the center. After Boehner floated his proposal to raise taxes on millionaires, the president immediately countered with a $400,000 tax threshold, along with cuts to Social Security that would be extremely difficult for Democrats to bear. The president won reelection on a plan to keep tax rates the same for the first $250,000 of income for families and $200,000 for individuals, but to raise rates on income above that level.

"There's a clear advantage of him putting Plan B on the table," said Republican strategist Ron Bonjean, who was a top aide to J. Dennis Hastert of Illinois when Hastert was House speaker. "He's showing members they're going to have to agree to a rate change," and he's showing the president "this is the furthest Republicans can go."

Rank-and-file Republicans, meanwhile, were adjusting to their shift from anti-tax orthodoxy, saying it was better to prevent a tax increase on most Americans by agreeing to raise rates on a wealthy few.

Boehner's plan would affect just two-tenths of 1% of Americans, whose tax rate on income above $1 million would rise from 35% to 39.6%. In addition, millionaires' taxes on capital gains and dividends would increase from 15% to 20%.

"You have to get what you can," said Rep. Jack Kingston (R-Ga.), who has been in office since before the tax cuts were first approved a decade ago. "Having served here before George Bush, America did operate before these tax cuts — and did fine."

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