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Boehner: GOP Ready for Fiscal Cliff Compromise

The battle over the “fiscal cliff” resumed yesterday, and so far it’s sounding much more mellow than it was before the election. In a speech, House Speaker John Boehner emphasized that Republicans are open to raising tax revenues through tax code reform:

House Republicans, Boehner said, are open to raising more tax revenue to reduce deficits — a key Democratic requirement — but only if it’s done through tax reform that lowers income tax rates and in conjunction with entitlement reform.

Done right, Boehner said in public remarks in Washington, a reformed tax code can raise more revenue by curbing special interest loopholes and deductions and by generating economic growth.

That’s very different than raising tax rates — something that has been off the table for Republicans.

Obama, by contrast, has proposed making a down payment on debt reduction by letting the portion of the Bush tax cuts that apply to high-income households expire. That would mean the top two income tax rates would increase to 36% and 39.6% next year from 33% and 35% today.

Meanwhile, Obama seems to be working on his interpersonal relations:

“He’s simply going to have to take a more active and forceful role,” said Democratic strategist Jim Manley, a former aide to Senate Majority Leader Harry Reid of Nevada. “He never got involved in the nitty-gritty of the legislative process. In light of the hyper-partisanship that still surrounds Capitol Hill, he’s going to have to change, and he’s going to have to take more of a lead in breaking the logjam.” 

There are already indications that Obama is ready to do so. The president, who said in his Nov. 6 victory speech that he was “looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together,” spoke yesterday by telephone with the top congressional Democratic and Republican leaders of the House and Senate.

A new tone, or just the parties regrouping for what’s expected to be a particularly nasty battle? As CNN notes, Boehner hasn’t specified how much he would want to raise through closing loopholes and deductions, and how much he would want to raise through economic growth generated by tax reform (more jobs, higher salaries, more tax revenue for the government). The latter is trickier to calculate, which means it may not be included in the Congressional assessment of how much revenue will be brought in, reports CNN:

In any case, the conventional way Congress assesses how much revenue a proposal would raise does not include potential economic growth effects of the kind Boehner expects, noted Jim Kessler, senior vice president for policy at the centrist think tank Third Way. 

So an official “score” of revenue raised from such a tax reform plan would be most heavily reliant on the tax breaks that are curtailed.

But if that “economic growth” revenue is left out of the equation, the proposal would have to rely primarily on closing loopholes and deductions. That means a lot of people would be paying more taxes, even if rates don’t change (the left portrays this as Republicans letting taxes rise across the board in order to protect their cronies in the top tax bracket). It’s hard to imagine Democrats passing up a chance to dredge up the class warfare rhetoric during the lame duck session, but enjoy this (probably brief) lull in partisan sniping while it lasts.


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