Leading GOP figure's tax compromise shot down

Rep. Tom Cole floated idea of negotiating tax cuts leaving out earners over $250,000 House Speaker John Boehner and other conservatives reject his idea Cole says major issues should be worked out in the debate next year

Washington (CNN) -- House Speaker John Boehner and other conservatives shot down a proposal from a senior congressional Republican who suggested that his GOP colleagues break from their firm anti-tax position and agree to a demand from Democrats to immediately renew middle-class tax cuts.

Rep. Tom Cole of Oklahoma, a member of the leadership team that helps round up House votes, told fellow GOP lawmakers that he thought they should, as a matter of political strategy, extend just the tax-rate cuts for those making $250,000 or less before the end of the year -- a position being pushed by President Barack Obama and congressional Democrats.

Cole first floated the idea at a closed-door meeting of the Republican whip team on Tuesday and his comments were first reported by Politico.

Cole told reporters after another meeting on Wednesday with House Republicans that he believed giving certainty to the majority of American taxpayers now was important. But he emphasized that he still opposed increasing tax rates for upper-income Americans.

"In my view, we all agree that we're not going to raise taxes on people who make less than $250,000. We should just take them out of this discussion right now, continue to fight against any rate increases, continue to work honestly for a much bigger deal," Cole said.

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Cole added that major issues should be worked out in the debate next year.

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"We need to deal with entitlement spending. We need to deal with job creation. Rates are intimately tied to that. So let's have that discussion. But I think it's easier to have without a lot of people whose taxes we don't intend to raise being worried they might get raised."

Cole's Tuesday comments were reported and distributed broadly by Democrats as a major development in the fiscal cliff talks. But they were quickly rejected by Boehner, who is negotiating with the White House and Democratic leaders on a way to avert the combination of spending cuts and tax increases set to take effect without an agreement by year's end.

"I told Tom earlier in our conference meeting that I disagreed with him," Boehner told reporters after meeting with GOP rank and file. "He's a wonderful friend of mine and a great supporter of mine but raising taxes on the so-called top 2 percent -- half of those taxpayers are small business owners that pay their taxes through personal income tax filing every year."

At the Wednesday meeting in the Capitol, Boehner also made a point in his opening remarks to tell members he disagreed with Cole, according to two GOP sources who were in the meeting.

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One of these sources said Cole brought up his idea with GOP members in the meeting, saying he did not support raising any rates.

Conservatives immediately rejected Cole's idea, and seemed annoyed that the attention on his comments was taking away from their focus to press Democrats to agree to some major entitlement reforms as part of a broad agreement to address tax rates and the automatic spending cuts.

Idaho Republican Rep. Raul Labrador didn't mince words when asked by CNN about Cole's idea.

"I think he's wrong and I think most of the conference thinks that he's wrong," Labrador said. "I think he's, you know, he's a good man who's served here for a long time. But he's also a man who has voted for a lot of the increased spending in Washington, D.C., and that's the problem."

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"I think this is a false choice between running off the fiscal cliff and damaging the economy, or raising rates on small businesses and professionals that also damages the economy," Texas Republican Kevin Brady, a senior member of the tax-writing House Ways and Means Committee, said.

Cole said he would continue to discuss his suggestion with colleagues, and predicted that if it came up for a vote, it would pass the Republican-led House. But GOP aides made it clear there are no plans for any vote on a bill to separate the middle-class tax cuts from those for higher-income earners.

Even though Republicans criticized the idea, Democrats praised Cole. Sen. Patty Murray, D-Washington, highlighted his shift in a speech on the Senate floor.

"I applaud Representative Cole for that common-sense and brave position. I am hopeful that he can persuade other Republicans to do the right thing for our families, small business owners and communities across the country who have so much at stake and who are looking to us to solve this problem," Murray said.

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That kind of endorsement probably won't help Cole make his case with fellow Republicans. Asked about potential backlash to his idea from anti-tax groups focused on enforcing a "pledge" not to raise taxes, Cole seemed nonplussed.

"My job is to get the best deal from the American taxpayers that I can get," he said. "If by keeping the pledge taxes go up on everybody, then I don't know if that's a very good idea. If, on the other hand, we can negotiate a deal, which I think we can, which keeps rates where they are but provides revenue and certainly protects people below $250,000, I think we have a responsibility to try and do that."

After the meeting with the rank and file, House Republican leaders were sitting down in the Capitol with several CEOs who are part of the "Fix the Debt" coalition chaired by Erskine Bowles, the former head of Obama's deficit reduction committee.

Boehner delivered a message to his members that he planned to reiterate to the CEOs, "We won't be party to a deal that protects big businesses and preserves special-interest tax breaks while raising tax rates on the small businesses we're counting on to create jobs."

After the meeting Bowles told reporters he did not see the GOP showing any flexibility in their opposition to any tax rate increases.