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Boehner Puts Tax Rate Increases On The Table

After weeks in which it seemed as though there would be no movement at all in the negotiations between the White House and Congressional Republicans over a possible deal to avert the quickly approaching fiscal cliff, it appears that there’s been movement in the form of an offer from Speaker John Boehner that includes increasing tax rates on high income earners:

Speaker John Boehner has proposed allowing tax rates to rise for the wealthiest Americans if President Barack Obama agrees to major entitlement cuts, according to several sources close to the talks.

It is the first time Boehner has offered any boost in marginal tax rates for any income group, and it would represent a major concession for the Ohio Republican. Boehner suggested hiking the Bush-era tax rates for top wage earners, including those with annual incomes of $1 million or more annually, beginning Jan. 1, two sources said.

Obama and Boehner spoke by phone Friday after a lengthy face-to-face session at the White House on Thursday. The quickening pace of private conversations between the two key players in the fiscal-cliff talks shows progress is being made in the negotiations, although they are not close to a deal yet, sources said.

Boehner also wants to use a new method of calculating benefits for entitlement programs known as “chained CPI,” which would slow the growth of Medicare and other federal health programs and save hundreds of billions over the next decade.

The speaker’s offer would not include extending federal unemployment benefits, and it is unclear how it would address sequestration — the tens of billions in spending cuts scheduled to go into effect for the Pentagon and other federal agencies starting Jan. 2.

And Republicans remain unyielding on agreeing to raise the U.S. debt limit as part of any agreement to avoid the fiscal cliff.

Boehner’s offer on tax rates was a significant move toward Obama’s position. But the proposal, as a whole, still isn’t acceptable to Democrats because of the level of revenue, the changes to entitlement programs that would hit beneficiaries and the absence of an extension for unemployment insurance benefits, according to a source familiar with the talks. The president has also been adamant that any deal include an increase in the debt ceiling.

Boehner’s office would not comment on the current state of the talks with Obama beyond saying no deal has been reached at this time, nor is one expected soon.

“The lines of communication remain open, but there is no agreement, nor is one imminent,” said Michael Steel, Boehner’s spokesman.

From the President’s point of view, this isn’t a perfect offer in many respects, however it’s significant because it marks the first time that the GOP has moved off it’s “no tax rate increases” orthodoxy, and it essentially means that the GOP has now given up its biggest bargaining chip. Assuming a deal is reached, the question now isn’t whether tax rates will go up for high income earners,but merely what the terms of that increase will be. There’s still room to negotiate over the rates and exactly who the increased rates would apply to. Indeed, there is even disagreement on the Democratic side on that point, with Senators like Chuck Schumer taking the position that $250,000 is too low a link and that the trigger amount for higher rates should be closer to the $1,000,000 that Boehner’s proposal includes. In some sense, though, those are minor points now that Boehner has conceded that there will be tax increases.

That doesn’t mean that a deal is inevitable, though. For one thing, the President has been as adamant about resisting any talk at all of entitlement reform as Republicans have been about resisting tax increases. If that remains the case, then it’s hard to see how the deal can be made in the short amount of time left. In fact, the time factor is another huge caveat to a deal. With the Christmas holidays approaching, Members of Congress are eager to get out of town although they have been told by leadership that they will likely be working through the end of the year. Additionally, the President is supposed to leave on his holiday trip to Hawaii on Tuesday, although that departure can obviously be delayed as it has been several times in the past. In either case, there are only 15 days left in the year and if a deal is going to be made it will have to be made soon so that legislative language can be drafted and votes whipped. Finally, there’s the question about how Republicans are going to react to news of Boehner’s new offer. It’s largely been bumped out of the news cycle by the tragedy in Connecticut, but the news will slowly start to get out and one can assume that Grover Norquist and other anti-tax activists will be pushing back pretty strongly on this. This leads to the question of how many Republican votes Boehner would actually be able to get for a final deal. Theoretically, he doesn’t need to hold together a majority of the caucus since he’d likely get most of the Democrats to vote for the plan, but a final vote that includes a large number of Republican “no” votes would be particularly embarrassing for the Speaker.

It’s still possible that there will be no deal at all, but this significance of this move by Boehner cannot be understated. It’s probably more likely now that there will be a deal than at any time since the election.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. michael reynolds says:

    The idea that Boehner is “allowing” this is funny. He had no choice. The rates were going up automatically. What he’s allowing is a continuation of cuts for the 98%.

    Highly-rated. Helpful or Unhelpful: Thumb up 26 Thumb down 0

  2. Maxwell James says:

    For one thing, the President has been as adamant about resisting any talk at all of entitlement reform as Republicans have been about resisting tax increases.

    Nonsense. Not only has the President repeatedly said he is open to entitlement reform, he has said in public fora that he is open to changing the cost of living adjustment.

    http://www.dailykos.com/story/2011/08/18/1008266/-Obama-pushes-chained-CPI-in-town-hall-meeting

    Highly-rated. Helpful or Unhelpful: Thumb up 17 Thumb down 0

  3. Peacewood says:

    Not even that. A tax increase for millionaires only, when Obama simply has to sit and wait for a bigger hike than that.

    This “concession” is less than impressive.

    Like or Dislike: Thumb up 11 Thumb down 0

  4. Argon says:

    Boehner says something of little or no significance. Film at 11.

    Like or Dislike: Thumb up 14 Thumb down 1

  5. edmond says:

    “From the President’s point of view, this isn’t a perfect offer in many respects, however it’s significant because it marks the first time that the GOP has moved off it’s “no tax rate increases” orthodoxy..”

    Uhh, guess what? Their orthodody will be challenged in 2 weeks when rates go up anyway. The Boner is delusional.

    Like or Dislike: Thumb up 7 Thumb down 0

  6. al-Ameda says:

    What is the radical solution here? It’s the Fiscal Cliff – tax rates increase for everyone and spending cuts for social “entitlement” programs.

    What is the sensible moderate solution here? The president’s solution – tax increase for only the top 2% of taxpayers and modest reductions in spending for social benefit programs. Obama’s plan is the middle ground.

    Tip O’Neil and Ronald Reagan would have signed off on the middle ground option after about 5 minutes of discussion.

    Like or Dislike: Thumb up 7 Thumb down 1

  7. C. Clavin says:

    What total bullshit.
    First off:

    “…For one thing, the President has been as adamant about resisting any talk at all of entitlement reform as Republicans have been about resisting tax increases…”

    I guess Doug has forgotten the President being hammered throughout the campaign for slashing $716B from Medicare. In addition the Presidents proposal to Boehner a couple weeks ago outlined $340B in Medicare cuts over the next decade. But I suppose if the facts don’t support your thesis…just leave them out.
    Second; how is this a concession by Boehner when it’s less in revenue increases than what is going to happen anyway under current law? If I made concessions like that I’d still be married.
    That’s the trouble with the stenographer corp and the pretend punditry…you clowns refuse to actually think about and investigate the facts. You just swallow whatever you are told to swallow.

    Highly-rated. Helpful or Unhelpful: Thumb up 25 Thumb down 1

  8. Brummagem Joe says:

    It’s still possible that there will be no deal at all, but this significance of this move by Boehner cannot be understated.

    Actually it doesn’t mean a damn thing. It’s just another rather vague “offer” if indeed it is accurate from Boehner. I believe it’s already been rejected because at best it’s a tactical maneuver aimed at enhancing Republican negotiating leverage when they strap on the debt ceiling suicide vests next year. The only deal Obama is going to accept is a comprehensive one and I see no sign of that and hence the chances of a deal before December remain at best 50/50 but I’d personally say negligible.

    Like or Dislike: Thumb up 10 Thumb down 0

  9. rudderpedals says:

    an offer from Speaker John Boehner that includes increasing tax rates

    Boehner has 218 Republicans lined up for this offer acquiescence? Didn’t think so.

    The thing about offers and negotiations is the negotiator has to have the authority to bind the principal. This guy has two quarters to make a phone call and that’s it.

    Nothing to see here folks, move along.

    Like or Dislike: Thumb up 8 Thumb down 0

  10. Tsar Nicholas says:

    Sun rises in east.

    The Dems have aces up and a larger chip count. The GOP has a 2-7, unsuited. It’s not that difficult to see how this hand will play out.

    Chained CPI for entitlement COLAs rather than the outdated CPI-U is a no brainer. Meaning for obvious reasons the Dems and Team Obama vehemently will oppose it.

    Separate but very related topics:

    The other neon elephant in the room — which of course isn’t getting too much attention from the usual suspects — is that states can’t afford Obamacare’s Medicaid expansion and given the SCOTUS’ decision last June they simply won’t fund it. Meaning that Uncle Sugar ultimately will be on the hook for that item too. And the Feds ironically enough will have plenty of extra customers for additional Medicaid dollars. Taxing the wealthy makes the likes of wealthy liberals and young students feel great about themselves. But it doesn’t do squat for the lower middle classes or for the working poor.

    It won’t end well.

    Like or Dislike: Thumb up 2 Thumb down 10

  11. David M says:

    @Tsar Nicholas:

    is that states can’t afford Obamacare’s Medicaid expansion

    Untrue. There is no question they can afford the Medicaid expansion, none whatsoever. Medical care for their citizens is just not a high priority for Republicans, so they are plenty willing to let people suffer if they think it will make Obama and the Democrats look bad.

    No one should take the “can’t afford it” argument seriously as it’s taking the responsibility away from the GOP officials who have decided they don’t want to expand Medicaid.

    Like or Dislike: Thumb up 7 Thumb down 0

  12. michael reynolds says:

    Once and for all, for anyone who thinks vague mooing about a gloomy future is clever or wise — see Tsar above with his “won’t end well” — nothing ends well. It all ends in death and oblivion. All of it. Everything. Sooner or later the planet is a cinder or a frozen rock, but eventually we are all dead.

    Problems are never solved, they are managed for now. You can only believe you’ve solved a problem if you shorten the horizon and put your imagination in cold storage.

    And there’s today’s happy Christmas thought.

    Like or Dislike: Thumb up 10 Thumb down 0

  13. de stijl says:

    From Doug’s post:

    one can assume that Grover Norquist and other anti-tax activists will be pushing back pretty strongly on this

    The “no tax increase ever” pledge will be thrown down the memory hole when it is no longer politically expedient. Given the polling on the question whether tax rates should increase on income over $250k, the pledge doesn’t provide any political benefit in this situation except for relations with the R base, and in preventing Representatives from being primaried on the issue.

    Boehner’s goal (and House Rs in general) is to play this so it can be argued that they did not break the Norquist pledge, so my best bet right now is that we hit the fiscal cliff, and then very quickly all rates except for $250k+ go back to 2003 levels.

    On the face of it, though, Boehner’s proposal breaks the Norquist pledge.

    Like or Dislike: Thumb up 1 Thumb down 0

  14. Davebo says:

    Doug’s at it again.

    Tsar mentions the sun rising in the East.

    Have you ever seen Doug and Tsar in the same room together?

    Of course you haven’t.

    Look on the bright side. He doesn’t troll his own posts Epinonimously.

    Like or Dislike: Thumb up 4 Thumb down 0

  15. C. Clavin says:

    Gun rights, abortion rights, taxes…who really cares.
    The biggest crisis we face is climate change.
    And Republicans just don’t give a f’.
    The written history of this era is going to be hilarious.

    Like or Dislike: Thumb up 2 Thumb down 0

  16. Whitfield says:

    A good compromise would be $350,000. As far as cuts, it is common in business, state/local governments, and other organizations to have across the board cuts of, say, 10%. They figure out where to cut. This could be done without affecting any services to the people. Just cut the heavy administration and administrative costs: fly commercial, cut back on travel, let some employees work at home, cut out the “training” that is often done at resorts, and cut out the military’s $800 coffee makers and $300 hammers. Let the government agencies buy their supplies directly from stores like Staples and Sams Club. Savings ? Enormous, because the government purchasing procedures wastes billions of dollars a year; just ask anyone who has ever worked in government or military. There is entirely too much waste in administering these federal programs (and state governments also), and much fraud. Billions go unaccounted for. The private sector, small businesses, gets by on very little administration and overhead. The government could too.

    Like or Dislike: Thumb up 1 Thumb down 2

  17. Jed says:

    @michael reynolds:

    Everything. Sooner or later the planet is a cinder or a frozen rock, but eventually we are all dead.

    Why such a Gloomy Gus? There is still a potential way in which all the planet’s matter is engulfed in a Red Giant, not as cinder, but a fusion. Of course the human race as we know it will be long dead by then. McWatt said, “Oh, well, what the hell” but I refuse to be constrained by such fatalism.

    As long as there are martinis, as long as there is music that makes even the most phlegmatic among us feel passion, food that drives us to discover and revel in other cultures, and the writings of Wodehouse, I will not give in.

    Wait … what? Congress is playing at doing something? With the Executive Branch?

    Heat death of the Universe might be preferable. Ignore above caveats bring on the extinction.

    Like or Dislike: Thumb up 3 Thumb down 0

  18. Peacewood says:

    And now Boehner is saying he’s willing to put off the debt limit fight for a year.

    Not perfect, but that is much more of a concession than he was offering yesterday. ‘Course, it will never pass with this group of Republicans, but still.

    Like or Dislike: Thumb up 1 Thumb down 0

  19. Eric Florack says:

    The Speaker needs a history lesson
    At no time in the history of this country have the Democrat paty ever cut anything but the military, despite repeated promises to do so
    the speaker also needs a swift kick in the ass on the way to the street.

    Like or Dislike: Thumb up 0 Thumb down 7

  20. Stan says:

    @Eric Florack: FDR cut spending drastically in 1937 and started a major recession. Since then presidents of both parties have avoided major spending cuts when the economy is depressed. Try studying history a little. It’s interesting, and it’ll do you a lot of good.

    Like or Dislike: Thumb up 4 Thumb down 0

  21. Brummagem Joe says:

    @Eric Florack:

    Haven’t checked but I find this rather difficult to believe given that a Democrat was in the WH at the end of WW 2 and WW 1. I also believe Clinton cut military spending in real terms in the early 90′s……the peace dividend remember.

    Like or Dislike: Thumb up 3 Thumb down 0

  22. Eric Florack says:

    @Stan: bull cookies.
    and again, @Brummagem Joe: , military spending, i said was excepted… that is all democrats ever cut.

    Like or Dislike: Thumb up 0 Thumb down 2

  23. Brummagem Joe says:

    @Eric Florack:

    Sorry I misunderstood you. However, as I recall Reagan tripled the national debt and Dubya doubled it and that was even before we had to deal with all the debt contracted as a consequence of the huge slump he left behind…..the worst in depth and duration since the one left by that other Republican Hoover.

    Like or Dislike: Thumb up 2 Thumb down 0

  24. Brummagem Joe says:

    Having had time to look at the reports from a couple of reliable newspapers and some comment from house economists, I’m coming round to the view that some cracks in the Republican ice are appearing (acceptance of the principle of tax hikes and recognition the debt ceiling has to be part of the deal) but we have a long way to go yet before this will be enough to satisfy the president who is going to want a comprehensive deal that looks very like the one Geithner originally tabled. Of course there’s then the question of whether Boehner has sufficient control of his caucus to get two thirds of them to vote for any deal. Much more of an open question.

    Like or Dislike: Thumb up 2 Thumb down 0

  25. MarkedMan says:

    I think Obama is just going through the motions, because he realizes Boehner doesn’t have the votes. The repubs are simply incapable of actually governing. Best bet: wait for the Fiscal cliff and after that all votes are about tax cuts and then Boehner can piece together enough repubs to be worth negotiating with. But of course at that point Obama knows that every minute Repubs refuse to cave is another minute they will be blamed for everyone’s higher tax bill.

    Like or Dislike: Thumb up 2 Thumb down 0

  26. stonetools says:

    Until the Republicans come out with a proposal:

    1. Agreeing to an increase in tax rates
    2.Spelling out what spending cuts the Republicans want,

    They haven’t advanced a serious proposal.
    The Administration is wisely refusing to do the Republicans’ dirty work. If the government only has a spending problem, then it should be easy for the Republicans to come up with a list of spending cuts to solve the “problem.” Oddly enough, they have been unable to come up with such a list.

    Like or Dislike: Thumb up 2 Thumb down 0

  27. Brummagem Joe says:

    @MarkedMan:

    think Obama is just going through the motions, because he realizes Boehner doesn’t have the votes.

    Fundamentally I think this is true. Obama really has no incentive to make a deal unless Boehner brings him one that gives him 90% of what he wants…..and Boehner’s caucus will never sign on for this. I think Boehner and leadership get this but most of the rank and file (not to mention wingnut chatterers) don’t. The game changes completely on January 1 when the Dems write appealing legislation in the senate that covers all the bases and forces Republicans into voting for or against.

    Like or Dislike: Thumb up 2 Thumb down 0

  28. Stan says:

    @Eric Florack: Thank you for your thoughtful response to my post.

    Like or Dislike: Thumb up 0 Thumb down 0

  29. Rob in CT says:

    At no time in the history of this country have the Democrat paty ever cut anything but the military

    You live in a fantasy world. It must be really distressing if/when you occasionally encounter the real one.

    Like or Dislike: Thumb up 0 Thumb down 0