Middle Ground on Tax Hike on the Rich Sought

A resolution to the fiscal cliff could include allowing tax rates on the wealthiest to rise next year, though not as high as currently scheduled.

“There are a lot of things that are possible,” Speaker John Boehner, R-Ohio, responded on Friday when asked if such a compromise was in the works. But he warned, “None of it’s going to be possible if the president insists on his positions—insists on ‘my way or the highway.’ ”

In a separate news conference on Friday, Minority Leader Nancy Pelosi, D-Calif., said, “It’s not about the rate; it’s about the money," meaning the revenue it will bring in.

Pelosi said she did not know how much lower than the automatic 39.6 percent increase set to take effect on top earners lawmakers could drop the increase and still produce the needed revenue.

“No, I don’t know that,” she said.

The scheduled expiration of the tax cuts enacted under President George W. Bush is at the forefront of fiscal-cliff negotiations. Congressional Republicans want to extend all the cuts, putting them at logger-heads with the White House and Democrats who only want to keep lower rates on annual incomes of up to $250,000. The stalemate has prevented Congress from acting on any tax-rate freezes.

Boehner said the “risk” the president is asking Republicans to take by going along with allowing a spike in the rates for top earners is one that will harm many small businesses and job growth.

The talk on Friday of some middle ground indicates that negotiators are seeking ways to give both sides something—perhaps allowing a smaller increase on high-end earners or even carving out provisions for small businesses.

Meanwhile, Boehner maintained his public stance that his fiscal-cliff negotiations with the White House are stalled—his last phone call with President Obama was on Wednesday. And he blasted as “reckless” a Wednesday remark from Treasury Secretary Timothy Geithner that the White House would “absolutely” go over the fiscal cliff unless Republicans agree to let tax rates increase on the top 2 percent of wage earners.

“I think that’s reckless talk,” Boehner said, also declaring that the White House had “wasted” another week.

Boehner also noted news reports this week reiterating a Republican talking point that Democrats have adopted a deliberate “slow walk” position on the fiscal-cliff negotiations to get what they want. Instead, Boehner urged the White House to offer a plan that could pass both chambers.

For her part, Pelosi said that Democrats do want swift action on at least one fiscal cliff component—freezing the set tax hikes for the middle class.

Get the latest news and analysis delivered to your inbox. Sign up for National Journal's morning alert, Wake-Up Call, and afternoon newsletter, The Edge. Subscribe here.