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John Boehner Signals No Softening On Taxes In Fiscal Cliff Standoff [UPDATE]

John Boehner Signals No Softening On Taxes
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Senior Congressional Reporter, HuffPost

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Senior Politics Reporter, HuffPost

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WASHINGTON, DC - NOVEMBER 9: U.S. Speaker of the House Rep. John Boehner (R-OH) addresses the media during a press conference in the U.S. Capitol building November 9, 2012 in Washington, DC. Boehner called for delaying the fiscal cliff and extending Bush-era tax cuts until 2013. (Photo by Allison Shelley/Getty Images)

WASHINGTON -- House Speaker John Boehner (R-Ohio) signaled no new willingness to bend on raising taxes for the rich Wednesday after one of his more respected GOP colleagues suggested the party should take President Barack Obama's offer to extend Bush-era tax cuts for 98 percent of Americans.

Rep. Tom Cole, a five-term Oklahoma Republican, told others in his party Tuesday that even though he does not want to let the top federal income tax rate rise back to the Clinton-era level of 39.6 percent, his party should take that deal for the time being. He stood by that assessment Wednesday, telling reporters the GOP would be wise to act on his idea "soon."

Asked if his proposal would pass the House if it came up for a vote, Cole replied, "My opinion is yes." He said "a lot" of his GOP colleagues agree with his approach. Still, he noted his influence only goes so far. "I'm not the chief whip. I'm just a deputy whip."

Boehner, however, was not buying it.

"I told Tom earlier in our conference meeting that I disagreed with him," the speaker told reporters Wednesday. "He's a wonderful friend of mine and a great supporter of mine, but raising taxes on the so-called top 2 percent -- half of those taxpayers are small-business owners that pay their taxes through their personal income tax filing every year. The goal here is to grow the economy and control spending. You're not going to grow the economy if you raise tax rates on the top two [percent]. It'll hurt small businesses; it'll hurt our economy."

The top income tax rate hitting wealthy Americans is 35 percent now, although most pay considerably less than that because of deductions and lower capital gains tax rates. Letting the top rate go up would raise about $800 billion over the next decade.

Congressional leaders are trying to avoid the "fiscal cliff" -- the mix of spending cuts required by last year's debt ceiling deal and expiration of Bush-era tax cuts (which Obama already extended once in 2010), all of which kick in starting with the turn of the year.

Boehner has the backing of other senior Republicans, including Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, who did not side with Cole.

"I disagree with him because, on the record, I believe the president has vilified this so-called 2 percent," said Issa. "Vilifying people and then punitively taxing them is un-American."

But Issa also noted that support for Cole's idea "spanned the spectrum" in the conference meeting and that while some people strongly disagreed with him, "everyone was respectful."

One senior House GOP aide cautioned not to put too much stock in Cole's comments.

"Cole is a pragmatist and sound strategist, but I wouldn't overread his comments -- he supports the speaker as our negotiator," said the aide, who did not have permission to speak on the record during fiscal cliff negotiations. "Rates are our line in the sand. Frankly, our members don't want to raise any taxes. Period."

The aide pointed to recent suggestions that the GOP could support raising revenue, however, through ending or capping some of the deductions that the wealthy take advantage of.

"New revenues through capping deductions and closing loopholes is a huge concession on our part. We're still waiting to hear what the president's concession on cutting spending is," the aide said.

Other Republicans, though, have signaled they are more open to raising taxes than the party line would suggest -- among them, Sens. Lindsey Graham (R-S.C.) and Saxby Chambliss (R-Ga.).

Another GOP aide said that there has been major pressure for the last two years from the rank and file to soften the party's anti-tax stance, including many who wanted to take an offer from Sen. Chuck Schumer (D-N.Y.) to keep tax rates higher just for millionaires and billionaires. GOP leaders stood strong, the aide said, persuading everyone to stick together.

But that unity is clearly starting to crumble now.

UPDATE: 4:55 p.m. -- Sen. Jim DeMint (R-S.C.) strongly rejected Rep. Cole's proposal to accept the Democratic plan to extend Bush-era tax cuts for just 98 percent of Americans and let tax rates rise for the nation's top earners. DeMint called that idea "capitulation" and "bad politics."

"I think we need to extend the current rates until we can reform the [tax] code," he told reporters on Capitol Hill Wednesday. "I don't think any decoupling of the rates is a concession we should make."

"I think that's capitulation -- it doesn't help the country," DeMint added. "For Republicans to agree to that is bad policy, and I think it's bad politics."

Sen.-elect Jeff Flake (R-Ariz.) also expressed his opposition to accepting President Obama's tax deal and referred to the attention surrounding Cole's comment as "a lot of talk."

"This notion that everything we said during the campaign about a balanced approach -- that 'balanced' means just doing the top 2 [percent] rates and nothing else. That's not balance," Flake told The Huffington Post. "That's what's sticking out like a sore thumb today."

Ryan Grim and Sabrina Siddiqui contributed reporting.

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Before You Go

What Could Fall Off The Fiscal Cliff
Military Health Care - $16 Billion(01 of14)
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In his last offer to House Speaker John Boehner (R-Ohio), President Barack Obama lobbied for $16 billion in cuts from the military's health care program, TRICARE. In 2012, the president also proposed hiking fees for military personnel and veterans who receive benefits under the program in an effort to help cut the defense budget. His proposal drew significant fire from Republican lawmakers and veterans' groups. (credit:(Mark Wilson/Getty Images))
Military Retirement Program - $11 Billion(02 of14)
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Both sides agreed to cuts from the military retirement program. Rep. Eric Cantor (R-Va.) claimed during July 2011 talks that lawmakers had reached a tentative deal to slash $11 billion. Under the current system, military personnel receive immediate retirement benefits after serving for 20 years. According to a recent report from the Congressional Budget Office, the appropriation cost per active military service member has increased at a higher rate than either inflation or the total pay package of private-sector employees. Given the budget constraints looming before the Defense Department, the CBO floated the idea of transitioning the military retirement program to a matching-payment model. (credit:(AP Photo/Matt York))
Federal Employee Retirement Program - $33 -$36 Billion(03 of14)
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Cantor claimed that Republicans and Democrats had agreed to $36 billion in savings over 10 years from civilian retirement programs. The president proposed a marginally more modest figure of $33 billion in his final offer to House Speaker John Boehner. Just this year, Republicans in the House Committee on Oversight and Government Reform also looked to find savings from the Federal Employee Retirement System by requiring employees to pay more of their salary into their pensions, which Democrats opposed as a pay cut that would make civil service less attractive for top talent. In September 2011, the federal government employed over two million individuals, either through the cabinets or independent agencies. Many Republicans have complained that the federal workforce has ballooned during the Obama administration, and while the raw number of employees has risen by 14.4 percent between Sept. 2007 and Sept. 2011, the percentage of public employees out of the total civilian workforce has remained fairly constant around 1.2 percent since 2001. Much of the raw growth has been concentrated in the Department of Defense, Veteran's Affairs and Homeland Security. (credit:(AP Photo/Carolyn Kaster))
Agricultural Subsidies - $30 - $33 Billion(04 of14)
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Democrats and Republicans agreed to cut as much as $30 billion from agricultural subsidies; the main opposition fell along geographical lines rather than partisan ones. Hailing from an agriculture-heavy state, Sen. Max Baucus (D-Mont.) threatened to pull out of talks entirely if a deal included that much in subsidy reduction. The president ended up pushing for $33 billion in cuts, but that figure also included reductions in conservation programs. Baucus now tells HuffPost any cuts should be made through the farm bill, not fiscal cliff talks. (credit:(AP Photo/Danny Johnston, file))
Food Stamps - $2 to $20 Billion(05 of14)
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Cantor pushed hard for significant cuts to food stamps, formally known as the Supplemental Nutrition Assistance Program. He charged that the federal government could save as much as $20 billion over ten years by eliminating waste and fraud, but the White House countered that the real number was closer to $2 billion. Instead, those cuts would force the program to scale back on the number of enrollees and the level of benefits it could offer. (credit:(AP Photo/Matt Rourke))
Flood Assistance - $4 Billion(06 of14)
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Obama proposed cutting $4 billion from flood assistance funding in his final offer to Boehner in July 2011. But Hurricane Sandy straining the National Flood Insurance Program; The New York Times reports that thousands of claims are being submitted daily, which could send the overall cost upwards of $7 billion for a program that suffers from a ballooning debt problem. And with climate change promising future flooding disasters along the eastern seaboard, cutting the program looks unwise. (credit: (AP Photo/ John Minchillo))
Home Health Care - $50 Billion(07 of14)
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The president offered to cut $110 billion over the next decade from the government's health care spending, excluding Medicare. Among the programs that could lose crucial funding is home health care, where Democrats and Republicans agreed to $50 billion in reductions over ten years. Cantor pushed for closer to $300 billion in spending cuts to health care, but Democrats appeared to stand firm. (credit:(AP Photo/Tony Dejak))
Higher Education - $10 Billion(08 of14)
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The president proposed cutting $10 billion from higher education over the next decade, mostly from Pell grants. Over nine million students relied on federal subsidized loans to afford college during the 2010-2011 school year, and the skyrocketing costs have continued to diminish the purchasing power of the Pell grant program. Obama has actively worked to make college more affordable for lower-income students. Key Republican lawmakers have attempted to cut funding for student loans; most notably, Rep. Paul Ryan (R-Wis.) slashed the maximum award from $5,550 per student per year down to just $3,040. (credit:(AP Photo/Jae C. Hong))
Medicaid And Other Health- $110 Billion(09 of14)
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The original funding levels proposed by Cantor and the GOP leadership would turn the entitlement program for America's poor into little more than a block grant program, Democrats claimed during the 2011 debt ceiling talks. Under such a program, they argued that states would then drop more people from enrollment and scale back on health benefits. In fiscal year 2009, over 62 million Americans -- many of them children -- depended on Medicaid for their health care. But the president did agree to $110 billion in cuts from Medicaid and other health programs. (credit:(AP Photo/Rick Bowmer))
Medicare - $250 Billion +(10 of14)
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Republicans pushed for a drastic overhaul to the entitlement program for America's seniors. Ryan infamously proposed turning Medicare into little more than a voucher system in which seniors would receive checks to purchase their own health care on the open market -- a plan that would ultimately force individuals to shoulder more of the burden for their health care costs. Democrats refused to accept changes similar to those in Ryan's plan. The president, however, was more open to other GOP suggestions on Medicare. In his final offer to Boehner, he agreed cut $250 billion over the next ten years -- in part by increasing premiums for higher-income seniors and by raising the eligibility age from 65 to 67 (although over a longer time frame). (credit:(AP Photo/Bill Haber, File))
Tax Reform - $800 Billion - $1.6 Trillion(11 of14)
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Republicans have again and again decried any attempt to raise taxes, either on the highest earners or on corporations. (A Democracy Corps/Campaign for America's Future survey shows that 70 percent of voters support raising taxes on the wealthiest two percent of Americans.) Instead, Boehner has pushed for a comprehensive tax reform bill that would lower the marginal tax rates while closing loopholes and eliminating deductions in order to raise around $800 billion in additional revenues. For many Democrats, that figure simply isn't enough. White House Press Secretary Jay Carney announced Tuesday that the president was aiming for as much as $1.6 trillion in new revenues, and the president told reporters on Wednesday that it would be practically impossible to raise the amount of revenue he wanted simply from closing loopholes and lowering rates. (credit:(AP Photo/Charles Dharapak))
Social Security - $112 Billion(12 of14)
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Social Security isn't driving the deficit, yet Republicans have pursued drastic changes to the program. Sen. Harry Reid (D-Nev.) has promised that Social Security would be off the table in the on-going negotiations to avoid the fiscal cliff, but Obama did concede to tying the benefits to a recalculated Consumer Price Index that would ultimately provide less money to retirees. Sen. Bernie Sanders claims that, under such a measure, seniors who are currently 65 years-old would see their benefits drop by $560 a month in 10 years and by as much as $1,000 in 20 years. The Moment of Truth project (led by the two former co-chairs of the president's deficit reduction commission, former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles) claims that the recalculated CPI could save as much as $112 billion from Social Security over the next ten years. (credit:(AP Photo, File))
Tax Loopholes And Deductions - Up To $180 Billion(13 of14)
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Although Cantor and other GOP House members demanded that any deficit-reduction deal brokered in 2011 be classified as revenue-neutral, they were open to closing particular loopholes in the corporate tax code and limiting itemized deductions for individuals -- given that they were offset by other tax cuts. Out of the $50 billion in savings to be found over the next decade from closing loopholes, Cantor proposed getting $3 billion from eliminating the break for corporate-jet owners and another $20 billion from voiding the subsidies for the oil and gas industries.On the individual earner side, he proposed eliminating the second-home mortgage deduction for $20 billion, as well as limiting the mortgage deduction for higher-income households to rake in another $20 billion. He also offered to tighten the tax treatment of retirement accounts. But Democrats wanted to see even greater action taken on itemized deductions. In June 2011, Rep. Chris Van Hollen (D-Md.) proposed raising $130 billion in new revenues by capping itemized deductions at 35 percent for the highest income brackets. The GOP response to his proposal at the time was a resounding "no." (credit:(Fabrice Coffrini/AFP/GettyImages))
Bush Tax Cuts For The Wealthy - $950 Billion(14 of14)
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Set to expire on Dec. 31, 2012, the Bush tax cuts represent one of the most controversial elements of the so-called fiscal cliff. They added over $1.8 trillion to the deficit between 2002 and 2009. Yet Republicans argue that an extension is necessary to create jobs and spur economic growth. But a study from the Congressional Research Service found that tax cuts for the wealthiest earners had little economic effect. The White House is pushing for a renewal only of those tax breaks for the lower- and middle-class Americans in order to save the average middle-class family between $2,000 and $3,500 next year. Letting the cuts expire for those earning over $250,000 a year -- or the wealthiest two percent of Americans -- would haul in $950 billion in savings over the next decade, according to the CBO. Obama stressed how much the country stood to gain from such an approach Wednesday during a press conference. "If we right away say 98 percent of Americans are not going to see their taxes go up — 97 percent of small businesses are not going to see their taxes go up," he said. "If we get that in place, we're actually removing half of the fiscal cliff." (credit:(AP Photo/Ron Edmonds))
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