"Raising tax rates is unacceptable," Boehner said last week in a post-election news conference. "Increased tax rates will destroy jobs in America by hurting small businesses across the country."
What House and Senate GOP leaders want, along with their rank-and-file, is to reform the grossly inefficient tax code, making it simpler, fairer and, most importantly, pro-growth. While you never hear this on the nightly network news, Republican leaders want to follow the tax reform outline set forth by the two top leaders of Obama's deficit-cutting commission (bipartisan proposals he ignored and shelved in his first term).
That commission, co-chaired by former President Bill Clinton's chief of staff Erskine Bowles, called for cleansing the cluttered tax code of corporate welfare, including other deductions, exemptions, credits, loopholes and assorted special interest tax breaks.
That would bring more federal revenue into the Treasury to help reduce deficit, allowing Congress to lower the tax rates to boost economic growth, accelerate job creation to bring down unemployment. and unlock capital investment for new business expansion.
That's what was done in the Reagan tax reforms of 1986 with the support of Republicans and Democratic leaders in the House and Senate, resulting in stronger growth and declining unemployment.
But will Obama, pursuing a four-year obsession to raise tax rates on upper income people, small businesses and investors -- even in a down economy -- go for it?
Immediately after his re-election, he still seemed to be sticking to his demands that taxes be raised on incomes over $250,000 which would also strike thousands of small business employers, and, according to CBO, cost 200,000 jobs.
Yet there were hints in the past week he may be tiring of fighting the same futile tax battle with the GOP, with little to show for it.
"I'm not wedded to every detail of my plan. I'm open to compromise," he said last week. After carefully combing through his remarks Friday, the Washington Post noted, "While demanding that the wealthy pay more in taxes, Obama did not specifically insist that their income tax rates must rise."
"It was not clear whether Obama had intended to signal new flexibility over how to tax the wealthy," the Post said.
But Obama's top advisers may be sensing a political shift on Capitol Hill, and among some Democrats, toward Boehner's position for raising revenue and the economy's growth rate at the same time.
"I was very encouraged by... Boehner's remarks Wednesday indicating his willingness to support increased revenue from tax reform if it were accompanied by meaningful entitlement reform," Bowles wrote in a Post op-ed column last week.
Even so, there's no way that any comprehensive reform that deals with tax rates, spending and entitlements could be written and enacted before year's end. Obama will be forced to take Bill Clinton's advice, delivered this summer, when he lectured Obama "to avoid doing anything that would contract the economy now...," while giving Congress time to enact the necessary changes in fiscal policy. That means, he said, extending all the Bush tax cuts, even for the top brackets, "until early next year."
In the end, while the Republicans failed to win back the White House, they may be winning the battle over fiscal policy, and George W. Bush's tax cuts remain the law of the land.
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