* Move could help Republicans get Medicare savings-aides
* Democratic clout on taxes even stronger next year
By Richard Cowan
WASHINGTON, Dec 5 While Republican leaders in
the House of Representatives insist that raising tax rates on
the rich is an impossibility, some Republican lawmakers now see
it as inevitable to avoiding the "fiscal cliff" of severe tax
hikes and spending cuts set to start Jan. 1.
Congressional aides, who asked not to be identified, said
Republicans are losing the public relations battle over keeping
low tax rates for the rich and are getting battered by President
Barack Obama and his fellow Democrats in Congress following
their Nov. 6 election victories.
On Capitol Hill aides often play an important role of
communicating what members are thinking but cannot say
themselves. In recent days, increasing numbers are putting out
word through news organizations that Republicans now feel they
cannot win on tax cuts for the wealthy, at least not now.
Without a deal by Dec. 31, $600 billion in across-the-board
spending cuts and tax increases, which are so severe that they
likely would shove the economy into recession, are scheduled to
Republican Senator Bob Corker of Tennessee told reporters
that his fellow Republicans are beginning to see a possible
upside to giving in to Obama on tax rates so the party can then
try to gain the upper hand in subsequent negotiations - maybe
next year - to make savings in expensive "entitlement" programs
such as Medicare healthcare for the elderly.
"If the House were to give that to him, where does the
discussion then go? It goes to entitlements, which is where it
ought to be in the first place," said Corker, who added, "I'm
hearing whispers of a light going off in some people's minds."
Conservative Republican Senator Tom Coburn of Oklahoma told
MSNBC: "Personally I know we have to raise revenue. I don't
really care which way we do it. Actually, I would rather see the
rates go up than do it the other way because it gives us a
greater chance to reform the tax code and broaden the base in
Democrats on Wednesday kept up pressure on Republicans to
allow votes on legislation to continue low tax rates on everyone
with net incomes below $250,000 a year - an estimated 98 percent
of taxpayers. Rates for the 2 percent above that threshold would
snap back to pre-2001 levels of 35 percent and 39.6 percent
under a Senate-approved bill.
"The first step, the most obvious step, is for the
Republican House to take the 98 percent both sides agree on and
pass our Senate bill and send it to the president for his
signature," Democratic Senator Patty Murray of Washington state
said in excerpts to a speech she was to deliver on the Senate
floor later on Wednesday.
A Senate Republican aide noted that Republicans "are in a
very weak bargaining position" on maintaining low tax rates of
33 percent and 36 percent on the top two income brackets "and we
all know we are going to get hell if we go off the cliff."
The aide saw the possibility of Republicans and Democrats
swapping a few more proposals that they know will be rejected,
before moving to an end-game by mid-December or so.
One such Republican proposal, according to another
Republican aide, would set forth a $1.6 trillion
deficit-reduction plan, with half the savings coming from higher
revenues and the other half from tough entitlement program cuts
- meaning benefit reductions for the elderly and poor that
Democrats undoubtedly would oppose, at least for now.
THE REAL DEAL?
But the real proposal - one that would be presented to the
full House and Senate for passage this month - could involve
letting tax rates rise on the highest income earners, although
maybe not to as high a level as Obama is demanding, according to
aides. It could be coupled with extending low estate taxes and
protecting middle-income people from being thrown into a tax
level intended for the rich.
The deal also would set up a framework, which has been
widely discussed, to work on comprehensive tax and spending
reforms next year that ultimately could reduce all tax rates
while ending a broad swath of tax breaks.
The Senate Republican aide added that if there is no deal
to avert the fiscal cliff by Dec. 31, Republicans would find
themselves in an even worse position in the new Congress
convening in January.
Senate Democrats will have a larger majority next year,
having picked up two more seats as a result of the Nov. 6
elections. The party also has gained seats in the House.
"We know that if we wait until the new Congress, the 98
percent bill will get passed by the Senate and there will be
more pressure in the House to do it by discharge," the Senate
Republican aide said.
"Discharge" refers to attempts already underway by House
Democrats to get the Democratic bill extending tax cuts for
everyone but the rich to the House floor through a "discharge
petition" signed by a majority of the chamber's members.
Even amid all the speculation of a Republican-Democratic
deal in coming weeks, it is hard to find anyone who voices
complete confidence in such an outcome, leaving open the
possibility that the country can still go off the fiscal cliff
on Jan. 1.