Why might Republicans cave in 'fiscal cliff' talks?

The GOP and President Obama have long disagreed over taxes for the rich. Although there are signs of potential movement with the fiscal cliff looming, there are also reasons it might not happen.

J. Scott Applewhite/AP
Speaker of the House John Boehner (R) of Ohio, and the House GOP leadership speak to reporters following a closed strategy session at the Capitol in Washington, Wednesday.

Are Republicans preparing to cave in their “fiscal cliff” talks with President Obama? That’s what some media reports now suggest. Wednesday’s New York Times, for instance, says senior GOP leadership aides are contemplating whether to abandon their opposition to higher tax rates for the wealthy. Conservative political correspondent Byron York of The Washington Examiner says flatly that retreat will happen. The only questions are when and what sort of reductions in Medicare, Medicaid, and other big entitlement programs Republicans might demand in return.

“A Republican offer to allow a top rate increase in exchange for entitlement cuts would turn the spotlight on the Democrats’ entitlement dilemma,” Mr. York writes.

Republicans and Mr. Obama have been at loggerheads over the taxes-for-the-rich question almost from the moment the latter took office. After all this time, and so much rhetoric, why would the GOP give up now on the central issue in the fiscal cliff talks?

In arms control terms, one reason might be that the administration has conveyed a credible threat of escalation. In other words, Obama has threatened to go ahead and plunge off the “cliff” and allow automatic tax increases and spending cuts to occur if the rich’s tax rates don’t rise – and top Republicans believe him.

They believe him not because they think he’s a tough hombre but because they understand that the White House fears the “cliff’” less than they do. Many Democrats would be happy to see the Bush-era tax cuts expire, while many Republicans would see that as a catastrophe. Plus, if Obama and House Speaker John Boehner plunge arm-in-arm over this fiscal Reichenbach Falls, more voters would blame the GOP for intransigence than the administration. That’s what polls show, anyway.

Conservative analyst William Kristol frames it this way in an essay for The Weekly Standard: “Might it be prudent for Republicans to acquiesce, for now, to a modified version of Obama’s proposal to keep current income tax rates the same for 98 percent of Americans, while also insisting on maintaining the reduced payroll tax rate of the last two years ... and reversing the dangerous defense sequester? That deal would be doable, wouldn’t wreck the country, and would buy Republicans time to have much needed internal discussion and debates about where to go next.”

But before Democrats start planning their tax-rate victory parties, we’ve got a couple of comments. The first is that it’s one thing for the GOP leadership to give in. It’s another for such a compromise deal to pass the House. As Mr. Kristol notes in the essay cited above, many rank-and-file House Republicans have pledged to never vote for a tax increase, and they might not be in the mood to start now.

Speaker Boehner, in a press conference Wednesday, made something of the same point.

“If you look at the plans that the White House has talked about thus far, they couldn’t pass either house of the Congress,” he said.

Second, all the stories about Republicans preparing to fall back might be coming from a few Republicans who think that’s the party’s best course of action and are trying to convince their colleagues of that fact. They call this “floating a trial balloon,” and the current run of tax stories might be a big, helium-filled rubber sphere vulnerable to tea party adherents with darts.

After all, with a few exceptions, the Republicans who speak on the record about raising tax rates on the rich are either moderates (Sen. Olympia Snowe of Maine), lawmakers who have promoted this for some time (Sen. Saxby Chambliss of Georgia), or pundits (Kristol).

In public, the Republicans who count still deny they’re thinking of retreat. “An obsession to raise taxes is not going to solve the problem. What will solve the problem is doing something about the entitlements, taking on the wasteful spending in Washington,” said House majority leader Eric Cantor at Wednesday’s GOP press conference.

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