- The Washington Times - Wednesday, December 19, 2012

President Obama and House Speaker John A. Boehner are squabbling over the “fiscal cliff,” but an even bigger fight is going on within conservative circles over Mr. Boehner’s latest offer to extend tax cuts for all but millionaires, who would see their taxes increase.

To some, any Republican who votes for that bill has broken GOP orthodoxy and supported a tax increase. But Grover Norquist, who runs Americans for Tax Reform and its influential no-new-taxes pledge, on Wednesday gave Republicans a green light, saying that he doesn’t consider letting tax rates rise to be a violation of their vows since they were going up already.

“When viewed with this in mind, and considering this tax bill contains no tax increases of any kind — in fact, it permanently prevents them — matters become more clear,” ATR said in a statement Mr. Boehner and fellow Republican leaders trumpeted. “ATR will not consider a vote for this measure a violation of the Taxpayer Protection Pledge.”

It’s the opposite of what Mr. Norquist told The Washington Times three weeks ago in a meeting with editors and reporters, when he said voters would see the hands-off approach — letting some rates expire while extending others — as an overall tax increase.

“I think the challenge is, [the] headline would be, message to the American people: ‘Republicans agree to tax increases.’ One, it might well be that in reality, but even if you recouped and got things fixed, you’d still have this teaching moment — Republicans agreed to tax increases,” Mr. Norquist told The Times.

His change of heart puts him at odds with other high-profile conservative groups ranging from the Club for Growth to the Heritage Foundation’s Action for America.

“This is a tax increase, and Grover, I think, knows that,” said L. Brent Bozell III, president of the Media Research Center, which tracks liberal bias in the press.

Mr. Obama is not immune to the pressure, either. His left flank has fiercely denounced his offer to Mr. Boehner to use “chained CPI,” which means relying on a slower-growing measure of inflation than the regular Consumer Price Index, to calculate future cost-of-living increases in Social Security and other federal benefits.

“Reducing COLA is a Social Security benefit cut,” she tweeted on Tuesday. “Any deal that cuts Social Security, Medicare or Medicaid benefits is unacceptable.”

But House Minority Leader Nancy Pelosi said Wednesday she disagreed with that, saying she didn’t consider chained CPI to a benefit cut.

“No, I don’t. I consider it a strengthening of Social Security,” she told reporters.

She said she’s “not thrilled with the president’s proposal” but said she considers it an acceptable way to bridge the political divide between Mr. Obama and Mr. Boehner.

That divide is less deep than would appear, Mr. Obama said Wednesday.

He said now that Mr. Boehner has agreed that some taxpayers will see their rates go up, the only question is the threshold.

Dubbed “Plan B,” Mr. Boehner’s proposal would extend the Bush-era marginal income tax rates for those with incomes of $1 million or less. Those who make more than that would see their marginal tax rate rise from 35 percent to 39.6 percent, plus other health care taxes which tax groups say would push it past 43 percent.

Mr. Boehner says extending the lower tax cuts amounts to an $876 billion tax cut over the next decade. Extending all rates, including for millionaires, would have added at least another $300 billion or so to that, Democrats said.

Mr. Boehner’s bill, also raises the level at which the Alternative Minimum Tax begins to bite, which amounts to a $1.9 trillion tax cut, and includes another $2 trillion in other cuts.

Winning Mr. Norquist’s approval was a major victory for Republican leaders.

Rep. Tom Cole, an Oklahoma Republican who was one of the first in the GOP to propose the two-pronged approach of extending some tax cuts while letter others expire, said ATR’s support will be “enormously helpful” in rounding up Republican votes for the bill.

“You’re getting not a complete victory but a partial victory, and I appreciate the fact that ATR sees it that way as well,” Mr. Cole said. “I think their clarification of that will be a really important factor for a lot of members wrestling with a tough decision.”

He said getting a permanent extension of tax cuts for 99 percent of taxpayers is a major win and the GOP should treat it that way.

“You have to recognize political reality. These aren’t permanent tax cuts and we can’t preserve all of them with a Democratic president and a Democratic Senate determined to undo at least some of them,” he said. “I think we basically take a lot of the Bush tax cuts off of the table for good.”

An ATR spokesman said Wednesday that the difference between what Mr. Norquist told The Times earlier this year and his stance now is that those earlier plans weren’t in writing, but Mr. Boehner’s is.

“We did a pledge analysis of the text. There are many ways to write a bill, and this one was written in such a way not to violate the pledge,” said Adam Radman, grassroots campaign manager for ATR.

But others said Mr. Norquist and his pledge have been wounded by his shift.

John Hart, spokesman for Sen. Tom Coburn, an Oklahoma Republican who has sparred with ATR over the tax pledge, said the change of heart shows Mr. Norquest is one of Washington’s “paper tigers.”

“None roar louder than Norquist. His statement today shows he’s not the powerful boogeyman Democrats and the media have made him out to be,” Mr. Hart said.

He pointed out that most Republicans in the Senate had already voted last year to end tax breaks for ethanol, which also contradicted Mr. Norquist’s pledge.