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Chances for Tax Cut Compromise Appear to Dwindle

September 13, 2010 at 3:26 PM EDT
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For a few hours Sunday, it appeared there might be compromise on whether to extend the Bush-era tax cuts for everyone except Americans making over $250,000. But House Minority Leader John Boehner later insisted that cuts should remain across the board. Gwen Ifill talks to Naftali Bendavid of the Wall Street Journal for more.

GWEN IFILL: The political twists and turns over tax cuts was all the talk in Washington today, but middle ground, in the end, proved elusive.

The glimmer of a potential compromise on tax cuts for the middle class faded today almost as quickly as it flared to life.

REP. JOHN BOEHNER (R), minority leader:You don’t want to punish these people.

GWEN IFILL: Yesterday, House Republican Leader John Boehner, who had staunchly opposed the president’s plan to end Bush-era tax cuts except for the middle class, suggested he might change his mind if forced.

JOHN BOEHNER: If the only option I have is to vote for some of those tax reductions, I’ll vote for them.But I’ve been making the point now for months that we need to extend all the current rates for all Americans if we want to get our economy going again and we want to get jobs in America.

GWEN IFILL: But Senate Republican Leader Mitch McConnell said today senators in his party would oppose any effort to end any of the tax cuts.

SEN. MITCH MCCONNELL (R), minority leader:Only in Washington could someone propose a tax hike as an antidote to a recession.And this is no small tax hike.The tax hike the administration is proposing according to IRS would apply to half of all small business income in this country.

GWEN IFILL: Mr. Obama has argued ending the tax cuts for high-income earners would save the country $700 billion over 10 years.Today the president seized on Boehner’s concession and McConnell’s disagreement.He spoke to a small group of supporters in a Fairfax County, Virginia, back yard.

U.S. PRESIDENT BARACK OBAMA:We could get that done this week , but we’re still in this wrestling match with John Boehner and Mitch McConnell about the last two to three percent where, on average, we’d be giving them $100,000 for people making a million dollars or more.

GWEN IFILL: The debate over tax cuts within the Democratic Party as well is expected to grow more heated as lawmakers return to Washington from a six-week break.

For more, we’re joined by Naftali Bendavid, congressional correspondent for “The Wall Street Journal.” Let’s start with John Boehner on “Face the Nation” yesterday.What did he mean?

NAFTALI BENDAVID, congressional correspondent, “Wall Street Journal”:Well, that’s really hard to say.I mean, my sense is that he made a little bit of a mistake and he went off message.You know, the Republicans have been so adamant that they don’t think the tax cuts should expire for anyone no matter how much they make.And for John Boehner to say, well, maybe he’d go along if forced with a proposal that would let them elapse for people who make more than $250,000, that really seemed a little bit off message.And the Republicans were very much backpedaling and retracting some of that today.

GWEN IFILL: In fact, he came out with a statement this afternoon saying we need to stop all tax cuts and cut spending now.Do we think his phone was ringing off the hook?Because we heard Mitch McConnell, we heard Republicans in the House saying, oh, no, no, that’s not our fault.

NAFTALI BENDAVID: I do think so.And, in fact, his office, very shortly after those comments that he made yesterday, was sending out things that were sort of clarifications and were trying to explain that, no, he is still in favor of continuing the tax cuts for everyone.So I think that basically he just said something that perhaps he didn’t intend to say.

GWEN IFILL: And a sure sign of that was that the White House seized on it very quickly.How did that roll up?How did that happen and why?

NAFTALI BENDAVID: Well, you know, for them, this was sort of a golden opportunity because they had been arguing that the tax cuts should be allowed to expire for the wealthy.They’re trying very much to create a populist contrast with the Republicans.So now to John Boehner saying something that sounded like, well, maybe they’re right or at least maybe if forced I could go along with what they’re suggesting, that was something they were very eager to pounce on to make their point.

GWEN IFILL: OK.So everyone is talking at cross purposes.What is the true state of the tax cut debate?

NAFTALI BENDAVID: Well, the fact is that the positions have hardened.I mean, today, both sides came out firing very hard.And the reason is this is very important to the messages of both parties heading into the election.

The Democrats’ whole message is we’re on your side, middle class.We’re in favor of you and not necessarily in favor of the wealthy.The Republicans’ whole message is there the Democrats go again raising taxes and spending more money.So neither side is going to want to give in near as I can tell before the election.

GWEN IFILL: How much of this is about the messenger and try to tar up the messenger a little bit in the case of the White House jumping down John Boehner’s throat?

NAFTALI BENDAVID: Very much so.You know, it’s unfortunate, perhaps, but in politics it’s very important to have somebody that you’re running against, not just something that you’re running for.And they’ve settled on John Boehner as their villain, essentially.

The Republicans are running against Obama and Pelosi, and so the Democrats need someone.And John Boehner, the leader of the Republicans in the House, is sort of the obvious choice.More and more, President Obama and other Democrats have been mentioning him and attacking him when they’re out there giving their messages.

GWEN IFILL: Members of Congress have been out of town for six weeks, a very long recess.And the Senate came back today.The House comes back later this week, tomorrow.

NAFTALI BENDAVID: Tomorrow, yes.

GWEN IFILL: How does their physically being here and getting on the floor and making announcements and actually speeches — and actually having to vote on things — how does that change the course of this debate?

NAFTALI BENDAVID: Well, it changes the dynamics a lot.The Democrats are pretty determined to bring something to the floor of the Senate and the House because they want to give their members a chance to vote in such a way that they can go back home and say, “I voted against a middle class tax increase.”

You know, when you’re scattered throughout the country, there’s a lot of debate about what you’ve done and what your voting record is.This gives them a chance to actually vote on something.I think the odds of something passing before the election are relatively slim, so it won’t make a difference in that sense, but it does give both parties a chance to make their point.

GWEN IFILL: And the point for the White House is what?

NAFTALI BENDAVID: Well, the point is we’re on your side.You know, we’re in favor of tax cuts for the middle class, but we’re not going to let the wealthy take advantage of the situation.And those Republicans, all they care about is rich people and the wealthy.That’s the point that I think the White House is trying to get out there.

GWEN IFILL: But when it comes right down to it — and we’ve debated this endlessly on this program, exactly about who is right about this.But when the president says it’s a $700 billion bill to do it the way the Republicans want, and the Republicans say you’re raising the taxes on people who are the engines of the economy, is there any real way to sort that out, or is it in both parties’ interest to keep that uncertain?

NAFTALI BENDAVID: Well, my sense is that it’s in both parties’ interest to keep that uncertain.There are compromises that are being floated.You know, there’s a proposal out there to only raise taxes on people making a million or more, so it would really be the high-end earners.But my sense is that this is much more about both parties having a position than about reaching some sort of compromise.

Now, they’ll have to have a compromise by the end of the year, because at that point the tax cuts will expire for everyone.Nobody wants to see that happen.So one way or another, they’re going to have to reach an agreement.Before the election not likely.

GWEN IFILL: So perhaps sometime between the first Tuesday in November and the Christmas recess.

NAFTALI BENDAVID: I think that’s what we should hope — we’ll hope for, yes.

GWEN IFILL: Naftali Bendavid of “The Wall Street Journal.” Thank you so much.