A certain wave of realism is sweeping through the House Republican ranks: It might be hard to resist a tax rate hike on millionaires.That article isn't one of those articles with a sensational lede that gets contradicted by the rest of the report—it's backed up by several on-the-record comments from House Republicans. And it's a pretty damn good illustration of just how weak the Republican position is.
It’s not that they’re about to fully embrace President Barack Obama’s tax hikes, but many Republican lawmakers privately concede that the 2012 election left them with far short of a mandate on taxes, and if urged by Democrats to raise rates on what they dub the mega-wealthy, they will have a tough time resisting.
Remember, if Congress does nothing, everybody's taxes will go up on Jan. 1, 2013 when the Bush tax cuts expire. Senate Democrats have passed legislation extending those tax cuts on all income below $250,000. President Obama says he'll sign that legislation if House Republicans pass it, but will not under any circumstance sign legislation extending Bush tax cuts for the top 2 percent. That leaves House Republicans with a choice: join Senate Democrats and the president in extending middle-class tax cuts or hold 98 percent of the country hostage in order to defend 2 percent.
Given that choice, it's not surprising that Republicans would suddenly show some more flexibility. Unfortunately for them, it appears to be a case of too little, too late. Earlier this year, Democrats would have almost certainly accepted a millionaire's tax in exchange for extending tax cuts on everyone else. Same thing in 2010. But House Republicans didn't even consider the idea, forcing Senate Democrats to pass legislation extending tax cuts on income below $250,000.
But now Republicans lost the election and with just six weeks before the end of the year, they are realizing they don't have the leverage that they once held. Nonetheless, they are still scrambling to get a deal they could have had six months ago, but given the weakness of their position, there's absolutely no reason for Democrats let them off easy.
It's clear that Republicans don't want to be the party that blocks a tax cut for 98 percent of Americans and even if they fail to act before the end they year, they won't be able to withstand pressure for very long once January rolls around.
Republicans will have more leverage in the context of tax reform, but even then they will be severely weakened from where they were earlier this year. President Obama sees tax reform as a mechanism for generating additional revenue above and beyond the expiration of Bush's high-income tax cuts. He's got no incentive to sign a deal that doesn't accomplish that goal and if Republicans won't work with him on achieving that, he's got no reason to work with them on the spending side.
The bottom line is that the only scenario under which the Bush high-income tax cuts don't fully expire at the end of the year is a scenario under which Democrats decide they want to extend them. But as long as President Obama and Democrats stand by their campaign plan, the Bush high-income tax cuts will be history in six short weeks.