House GOP leadership is considering linking a short-term extension of the expiring Bush-era tax cuts to an overhaul of the tax system this summer, aiming to give its party a campaign talking point and to pressure Senate Democrats to act.
While the details of the plan are very much up in the air, one option being considered is passing a bill extending the 2001 and 2003 tax rates for one year along with a resolution affirming GOP principles for tax reform.
The measures could also include some form of fast-track authority, much like the power granted to the Joint Committee on Deficit Reduction, to expedite floor consideration of a tax reform plan in 2013, when the Bush-era tax cuts would again expire.
Speaker John Boehner (R-Ohio) has already stated he wants to vote on an extension of the tax cuts before the November elections, and a vote could come as soon as June or July. That would give Republicans an opportunity to tell constituents they voted to keep taxes low while Senate Democrats demurred.
House Ways and Means Chairman Dave Camp (R-Mich.) and Majority Whip Kevin McCarthy (R-Calif.) have been holding closed-door meetings with rank-and-file GOP Members on the subject.
Any decision to move forward with a vote this summer would be strictly an effort on the part of Boehner and Camp to lay down a political marker because neither Democrats nor Republicans expected serious negotiations on the tax cuts to begin until after the elections.
Boehner’s strategic decision to bring taxes to the floor this summer could serve two key purposes for Republicans.
It could provide the Conference an opportunity to set itself apart from Democrats on a hot-button issue such as taxes. It also provides Boehner an opportunity to begin to set the parameters of the lame-duck session.
Over the past 18 months, House Republicans feel they have had their most success when they’ve been able to effectively paint Democrats in the Senate and the Obama administration as being unwilling to work with the GOP or provide their own proposals. “Where’s your plan?” was a GOP mantra during a number of last year’s spending debates.
But when Republicans have been divided for long periods of time — most notably on the debt ceiling increase and the payroll tax cut extension — Boehner has been hamstrung and forced into agreements many Republicans didn’t favor.
Getting in front of Democrats will provide Boehner with months to hammer the administration and Senate Democrats and try to frame the lame-duck session in Republicans’ favor.
Setting the stage on taxes could also help him steer his volatile Conference. On virtually every issue Boehner has struggled with since the GOP took control of the chamber, it has taken months of careful cajoling and hand-holding to convince his Members to back his policy plays in talks with Democrats. His most dug-in conservatives have often done so only after a lengthy show of support for hard-right policies.
Laying out a purely Republican plan on the Bush tax cuts and broader tax reform now could strengthen those efforts going into the lame duck, when Boehner might need every possible GOP vote to pass anything on taxes.
And although the move might irk some Republicans who have pushed for the chamber to tackle tax reform this year, not in 2013, it would equally be a concession to those in the party who have asked that leadership hold a vote on a tax-cut extension this year, before they head into the lame duck.
“They’re definitely pushing leadership to do something sooner rather than later,” said an aide to a rank-and-file Member. “Why would we wait until December to pass a bill to extend the Bush tax cuts?”
Further, it would buy the GOP a year during which it could come up with a solid tax reform proposal and could be a score for Camp, who has long said he is interested in using the expiring tax cuts as an opportunity to spur major changes to the tax code.
Still, the plan doesn’t come without risk. There is no telling who will control Congress and the White House come January. Presumptive GOP presidential nominee Mitt Romney supports an extension of the Bush-era tax cuts, while President Barack Obama has said that he wants to limit the tax increases to wealthier taxpayers.
Boehner is expected to address this and other financial issues at a speech before the Peter G. Peterson Foundation Fiscal Summit today.
He said last week that the House will act to put pressure on the Senate.
“The House is going to act to extend the current tax rates. Whether we make them permanent or we extend them for a year, that debate’s still up in the air,” he said in an interview on CNBC.
If Congress does not act before Dec. 31, the tax cuts will expire, spiking tax rates for individuals and investors.