Boehner willing to compromise but maintains that ending tax cuts for wealthy is ‘bad policy’

Signaling a potential deal on tax cuts, House Republican leader John A. Boehner said Sunday he’d be willing to preserve Bush-era rates for the middle class while letting them expire for the wealthy.

The Obama administration wants to make the tax cuts permanent for families earning less than $250,000 a year and individuals earning less than $200,000. Republicans, and some Democrats, advocate keeping all the tax cuts, which will expire at the end of December unless Congress acts. That would preserve lower rates for all but about 3% of Americans.

On CBS’ “Face the Nation” Sunday, Boehner indicated some flexibility but cautioned that raising taxes on the wealthy was “bad policy” and could harm the economy.

But he said he’d vote for middle-class tax cuts if that was his only choice.

“If the only option I have is to vote for those at $250,000 and below, of course I’m going to do that,” he said. “But I’m going to do everything I can to fight to make sure that we extend the current tax rates for all Americans.”

In response, White House Press Secretary Robert Gibbs issued a statement: “We welcome John Boehner’s change in position and support for the middle-class tax cuts, but time will tell if his actions will be anything but continued support for the failed policies that got us into this mess.”

That triggered a rejoinder from Boehner, who issued a statement of his own: “Instead of resorting to tired old class-warfare rhetoric, pitting one working American against another, the president and the Democratic leadership should start working with us this week to ensure a fair and open debate to pass legislation to cut spending and freeze tax rates without any further delay.”

Congressional estimates put the cost of extending the tax cuts for everyone at nearly $4 trillion over 10 years. Eliminating the rates for the wealthy reduces the tab by about $700 billion. Currently, the top tax rates of 33% and 35% will revert to 36% and 39.6% at the end of the year. But if the tax cuts are allowed to lapse, all Americans would pay more — adding more than $1,500 to the average household payment, according to one estimate.

Austan Goolsbee, the new chairman of the White House Council of Economic Advisors, told ABC’s “This Week” that he welcomed Boehner’s nod toward tax cuts for the middle class. “If he’s for that, I would be happy,” Goolsbee said.

And senior White House advisor David Axelrod urged Republicans to support permanent cuts for the middle class.

“We agree on the middle-class tax cuts,” Axelrod said on NBC’s “Meet the Press.” “Let’s not hold them hostage while we debate whether we’re going to give this very small number of [wealthy] people a tax cut that we can’t afford.”

Some Democrats in both the House and Senate, concerned over the possibility of losing control of Congress this fall, wonder if it would be smarter to lower middle-class tax rates now but keep the cuts for the wealthy in place, at least until the economy improves.

Boehner said he would prefer that plan.

“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,” he said. “And we want to get jobs in America.”

The Bush tax cuts came with an expiration date to hold down the long-term price tag. Republicans gambled that, when the time came, political pressure would force Congress to extend the lower rates.

Both parties see the tax issue as a way to illustrate their differences to voters.

Boehner and President Obama have been jousting with each other recently. Last month, Boehner demanded that the president fire his entire economic team.

Last week, the president traveled to Boehner’s home state to single him out for criticism. During a speech in Parma, Ohio, Obama said the Republican offered “no new ideas” and was following the “same philosophy that led to this mess in the first place: Cut more taxes for millionaires, and cut more rules for corporations.”

If Republicans take control of the House, Boehner could become speaker, replacing Nancy Pelosi (D- San Francisco). That also would put him in the line of presidential succession, behind Vice President Joe Biden.

House Majority Leader Steny H. Hoyer said Sunday that although Democrats will “probably” lose some seats, he remained confident they would continue to run the House after the election.

“We’re going to hold the House,” the Maryland Democrat predicted on CNN’s “State of the Union.” “Our candidates are feeling good.”

But Hoyer acknowledged that the Democratic Party may not be able to financially support all of its candidates, especially those trailing by large margins. “If there are candidates that are very substantially behind and can’t make it,” he said, “clearly we will have to make some tough judgments.”

And the Democratic National Committee announced Sunday that despite Boehner’s new tax-cut comments, the Democrats still plan to air an ad depicting him as a supporter of tax cuts for the wealthy and an opponent of more money for public service positions like police officers, firefighters and teachers.

“Boehner has a different plan,” says the ad, which will air in Washington and on national cable channels beginning Tuesday. “Tax cuts for businesses and those that shift jobs and profits overseas, saving multinational corporations $10 billion. So to China and India and Mexico, Boehner has a message: You’re welcome.”

richard.serrano@latimes.com