While House Speaker John Boehner and other Republicans tried to seize the upper hand in the fiscal cliff negotiations today by telling the media that the White House isn’t serious about reaching a deal until President Obama backs off raising taxes on the wealthy, the GOP is showing signs of cracking as conservative Oklahoma Republican Congressman Tom Cole said yesterday that his party should accede to the president’s wishes.
In a private meeting of Republican leaders, called the whip team, Cole reportedly said that it would be better to make sure taxes aren’t raised on 98 percent of the country who make less than $200,000 a year than to battle with Obama over the top 2 percent and risk raising taxes on everyone. Cole’s views are being viewed around Washington as a meaningful break in the GOP ranks because he’s such a longtime Republican loyalist and a close confidant of Speaker Boehner.
“If we don’t believe taxes should go up on anybody, why can’t we accept a deal that takes 98 percent out and still leaves us free to fight on the other grounds,” Cole said in an interview with Fox News on Wednesday. “I’m not for using the American people for leverage or as a hostage.”
But Boehner was quick to create some distance between the GOP and Cole’s position.
“I told Tom earlier in our conference meeting that I disagree with him,” Boehner said at a news conference. “We’re not going to grow the economy if you raise taxes rates on the top 2. It will hurt small businesses. It will hurt economy.”
Boehner today tried to give the public the impression that the White House and Democrats aren’t serious about a deal—because they won’t agree to his demands. He said that Treasury Secretary Tim Geithner, who Obama has appointed to take the lead in the early stages of negotiations with Republicans, has offered no “specific” plan.
“This is not a game,” Boehner said.
“First, despite the claims that the president supports a balanced approach, Democrats have yet to get serious about real spending cuts,” the Ohio Republican said. “And secondly, no substantive progress has been made in the talks between the White House and the House over the last two weeks.”
But Senate Majority Leader Harry Reid of Nevada said Democrats are still waiting for a reasonable proposal from Republicans. He told reporters today that “We need a proposal from them.”
Meanwhile, the president, fresh off his resounding beatdown of Mitt Romney in the election, has chosen to use the bully pulpit to make his case, speaking directly to the public yesterday after meeting with a group of middle-class Americans.
Earlier this week the White House issued a reportthat detailed what would happen if Congress doesn’t act to preserve tax cuts for the middle-class. The report, entitled “The Middle-Class Tax Cuts’ Impact on Consumer Spending & Retailers,” prepared by the president’s National Economic Council and his three-member Council of Economic Advisers, argues that if Congress allows the middle-class tax cuts to expire, the economy would be devastated—the growth of the GDP could be slowed by 1.4 percentage points and consumers could spend an estimated $200 billion less than they would have in 2013 just because of the higher taxes. The potential tsunami that could take $2,000-3,000 out of the pockets of the average American is a confluence of the expiration of the Bush tax cuts, the expiration of President Obama‘s 2 percent payroll tax cut, and a huge cut in government spending, all set to go into effect at the end of the year and which would take a combined $800 billion or so out of the U.S. economy at a time when the nation is just recovering from the Great Recession.
Ironically, the enormous cut in government spending—including a $55 billion reduction to the Pentagon’s budget in 2013, a reduction of payments to physicians participating in Medicare, substantial cuts to FEMA and the Dept. of Education—was put in place by the White House and Congress during the 2011 debt-ceiling fight as a measure to force the two sides to compromise in order to stop the cuts from taking place. In other words, the two sides agreed to massive cuts that it never intended to let happen as a way of motivating itself two years later.