(Bloomberg) — U.S. House Republican Leader John Boehner said he would vote for middle-class tax cuts sought by the Democratic Obama administration even if it means eliminating reductions for wealthier Americans.
Boehner would support extending tax cuts for those making less than $250,000 a year "if that's what we can get done, but I think that's bad policy," he said yesterday on CBS's "Face the Nation" program. "If the only option I have is to vote for some of those tax reductions, I'll vote for it."
"I'm going to do everything I can to fight to make sure that we extend the current tax rates for all Americans," the Ohio representative said. Taxes are expected to dominate the agenda when Congress returns this week. Boehner's remarks came after House Democrat
Chris Van Hollen said he would consider extending the Bush-era tax cuts for wealthier Americans for a year if Republicans would agree to make the reductions permanent for the middle class. Van Hollen commented during an interview on Bloomberg Television's "Political Capital with Al Hunt."
President Barack Obama and congressional Democrats favor extending tax cuts enacted under George W. Bush's administration only for households earning below $250,000, about 98 percent of all taxpayers. Republicans including Boehner say raising rates for higher-income Americans will hinder economic recovery.
"When you start to look at who's going to be taxed, about half of all small business income will be taxed under the president's proposal," Boehner said on CBS. "These are the very people that we expect to invest in the economy and begin creating jobs. Why would we want to punish them?"
Obama's plan would cost the federal government $2.2 trillion in revenue over the next decade, according to the Pew Economic Policy Group. The Republican proposal to keep the tax cuts for wealthy Americans would cost an additional $1.1 trillion, Pew said. Republicans say the tax cuts should be retained without reducing spending or raising taxes elsewhere.
"If they were to come back and say, 'Hey, let's just do one year for the top 2 percent, and permanent for the middle class,' that would be something that obviously people would have to think about," Van Hollen, chairman of the Democratic Congressional Campaign Committee, said on Bloomberg Television.
Austan Goolsbee, Obama's new chief economist, responded to Boehner's support for middle-class tax cuts on ABC's "This Week" yesterday by saying "If he's truly saying that we can, as the president called for, get a broad consensus to extend the middle-class tax cuts, we should do it."
'Best They Can Get'
"This is the first time we've seen a major Republican leader indicate that if the middle-class tax cut is the best they can get, they will take it," Stan Collender, a former Democratic House and Senate budget analyst who is managing director of Qorvis Communications, a Washington communications firm, said in a telephone interview.
Goolsbee, named chairman of the White House Council of Economic Advisers last week, said that sometimes "what appears to be the offer of doing the sensible thing" gets caught up in partisan politics and "falls apart."
William Gale, co-director of the Tax Policy Center, a Washington research organization, also expressed skepticism about the ability of Republicans and Democrats to strike a deal on taxes before the November congressional elections. Lawmakers often "decide they will get more out of milking the issue rather than solving the problem," he said.
"I think it's more likely that Republicans don't want the issue used against them," political analyst Charlie Cook said about Boehner's comments. "It's a long way from Boehner saying something on a Sunday show to a White House signing ceremony."
Wait for Senate
House Majority Leader Steny Hoyer, a Maryland Democrat,said the House of Representatives will see "what the Senate can do" before pushing for a compromise on the tax issue.
'The House is not the key factor here. It's the Senate," Collender said yesterday. "The question is whether anyone in the Senate will follow what Boehner is saying."
Collender predicted that the Senate will take up the tax cut issue in about 10 days because it makes sense for Senate Majority Leader Harry Reid, a Nevada Democrat, to take up the matter now because "he has no leverage" after the November elections. Before the election, Senate Republicans will face "a lot pressure" not to filibuster if a bill is taken up because they won't want to face angry constituents, Collender said.
Time Will Tell
White House press secretary Robert Gibbs issued a statement yesterday welcoming Boehner's "change in position and support for the middle-class tax cuts, but time will tell if his actions will be anything but continued support for the failed policies that got us into this mess."
Goolsbee said Obama intends to stand behind his plan to eliminate tax cuts for the wealthy. The president believes tax cuts for the rich are "the least effective bang for the buck we have" in stimulating the economy, he said on ABC.
On "Fox News Sunday" Goolsbee rejected Republican claims that extending tax cuts for the wealthy would hurt small businesses.
"If you want to help small business, pass the president's bipartisan small business bill," Goolsbee said. "It would cut taxes for 8 million real small businessmen in four different ways."
David Axelrod, a senior adviser to Obama, said there was no reason to even debate an extension of tax cuts for everyone because it's not economically feasible.
"We just can't afford it," Axelrod said yesterday on NBC's "Meet the Press." "We agree on the middle-class tax cuts; let's not hold them hostage."