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Boehner lays down markers on year-end 'fiscal cliff'

 

House Speaker John Boehner (R-OH) presaged another developing moment of brinksmanship on taxes and spending, vowing that House Republicans would vote to extend expiring tax cuts before the election, and insist on further cuts in spending to accompany another increase in the debt limit.

Boehner said that the House would vote this fall "before the election" to extend the Bush-era tax cuts, which are set to expire at the end of this calendar year. Income taxes would spike upward on Jan. 1 barring action to either extend the tax cuts or reform taxes on a permanent basis.

The Republican speaker said the extension on which the House will vote, which comes on top of the two-year extension approved by Congress and President Obama in late 2010, would give lawmakers a chance to work on broad-based tax reform next year.

"This will give Congress time to work on broad-based tax reform that lowers rates for individuals and businesses while closing deductions, credits, and special carveouts," Boehner said in advance excerpts of his speech to a fiscal summit Tuesday in Washington. "Our bill to stop the New Year’s Day tax increase will also establish an expedited process by which Congress would enact real tax reform in 2013."

Boehner's warning, though, reflects the uncertain political terrain facing lawmakers after Election Day. Republicans have hopes of winning the Senate as well as the presidency, though their odds of accomplishing both have been tempered in recent months. Boehner himself warned that the GOP has a one-in-three chance of losing the House.

If Congress were to fail to address taxes and a looming vote to increase the nation's borrowing authority -- Treasury Secretary Tim Geithner suggested that wouldn't be necessary until 2013 -- it would force a reckoning with those two difficult issues during a lame-duck Congress. But either party could conceivably claim a mandate for its prescriptions as a result of the election results, and find an incentive in punting on either issue until the new Congress convenes in January, and the president -- either the same one, or a new one -- is inaugurated.

"I don't think you'll see a permanent resolution to our problems in a lame duck session. I'm not sure that's the appropriate place to do that," House Budget Committee Chairman Paul Ryan (R-WI) said at the same summit.

To that end, Boehner also laid down markers for the parameters on which House Republicans would insist in order to again raise the debt limit. "I think in the lame duck you'll see something to make sure that we don't have a train wreck. Does that mean we'll have permanent entitlement reform, a grand bargain that will fix every fiscal problem once and for all? I don't see that happening."

"When the time comes, I will again insist on my simple principle of cuts and reforms greater than the debt limit increase," Boehner said in prepared remarks. "This is the only avenue I see right now to force the elected leadership of this country to solve our structural fiscal imbalance."

The speaker said that while stopgap measures weren't "ideal," he would accept them in order to insist upon the bigger cuts and reforms.

"It is pretty galling for Speaker Boehner to be laying down demands for another debt ceiling agreement when he won't even abide by the last one," said Sen. Charles Schumer (D-NY) in response to Boehner's remarks, referring to GOP efforts to undo the mandatory defense cuts in the debt-ceiling deal. "The last thing the country needs is a rerun of last summer's debacle that nearly brought down our economy."

Indeed, the debt ceiling fight took a political toll on nearly all of the political actors involved, especially Congress, which saw its approval ratings tumble to an all-time low. Even some Republicans have conceded their party risked seeming intransigent as a result of the fight.

That might offer encouragement for Democrats to hold out against an agreement; if their numbers in Congress are improved next year, and President Obama is re-elected, they might be in a stronger bargaining position to insist on their proposals that the wealthy shoulder a larger portion of the tax burden.

Frank Thorp contributed.