Determined not to bend on taxation, GOP eyes other bargaining chips

Republican lawmakers have repeatedly vowed not to endorse any tax
increases, making it likely they will turn to other bargaining chips to
strike a deal with the White House on the expiring tax cuts.

Lawmakers from both parties sat down on Wednesday with representatives of the Obama administration in the hopes of ironing out an agreement, but it is doubtful that Republicans will meet them halfway.

{mosads}While Democrats have indicated they are willing to bend on Obama’s plan to lift taxes on families making more than $250,000 a year, Republicans assert any tax increase will do further harm to the ailing economy.

Sen. Charles Schumer (D-N.Y.) recently proposed extending all the George W. Bush-era tax cuts except for people making more than $1 million annually. Republicans quickly rejected that plan.

Conservative-leaning groups anticipate some sort of extension of the tax cuts for all brackets. Anything less than such an extension would trigger strong criticism from the right.

If Republicans agree to any tax hike, it would be “completely catastrophic,” according to Ryan Ellis, the director of tax policy for Americans for Tax Reform.

“I think you’d find not only us but the entire American conservative movement go apoplectic, because that’s been the expectation,” he said.

Based on that pressure and their public statements on the campaign trial, Republican negotiators are likely to use bargaining chips that have nothing to do with taxes.

President Obama is strongly urging lawmakers to approve a pending U.S.-Russia treaty and to extend unemployment benefits. Senate Republicans have softened their stance on the Strategic Arms Reduction Treaty (START) in recent days and have said they will not back an unemployment-benefits bill until a tax deal is in place.

Senate Minority Whip Jon Kyl (Ariz.), one of several GOP negotiators on the tax cuts, is a key figure on START. Kyl last month indicated the Senate should not tackle START in the lame duck, but in recent days has indicated it could be addressed this month in the upper chamber.

Kyl said Wednesday that if negotiators don’t reach a deal on the Bush taxes within a week, “then you’re not going to have time to do START.”

Meanwhile, two high-profile conservatives, Rep. Mike Pence (R-Ind.) and Sen. Jim DeMint (R-S.C.), will formally introduce legislation on Thursday seeking to extend all the tax rates permanently. Both House GOP Leader John Boehner (Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) support a permanent extension of the Bush-era tax cuts. However, many Republicans and Democrats on Capitol Hill believe the tax cuts will be extended for a certain amount of time.

For some right-leaning groups, though, an extension of tax cuts for several years will be somewhat disappointing.

Permanently extending the tax cuts, said Andrew Roth, the vice president of government affairs at the fiscally conservative Club for Growth, is the only good option for ending uncertainty in the market.

Roth said conservatives would experience “disappointment” if the estate tax were reinstated, but that it would pale in comparison to conservatives’ reaction if any income taxes were allowed to go up on Jan. 1.

“If income tax rates go up anywhere, I think you automatically turn the dial up to 11,” he said. “We’re only three weeks away from one of the most historic elections in modern history. You’d think Republicans would take a hint.”