Incoming House Majority Leader Eric Cantor says that unless President Obama supports permanently cutting taxes on income over $250,000, nobody should get any tax cuts at all.
WALLACE: If the president says, "Extend the tax cuts for the middle class permanently and I'll agree to a two- or three-year extension for tax cuts for the wealthy," could you buy that?
CANTOR: First of all, Chris, let's set the record straight. No one's getting a tax cut here. One of two things is going to happen January 1. That is your rates are either going to -- either going to go up or they're going to stay the same. So this notion that somehow we are passing tax cuts is just not true.
And so, no, I am not for decoupling the rates, because all that says to people looking to go back in and put capital to work and invest to create jobs is, "You're going to get taxed on any return that you can expect."
Cantor knows that we're really talking about two different tax cuts -- one that applies to every taxpayer, regardless of income, and one that only applies only to taxpayers with income over $250,000. Cantor also knows there isn't much support for extending the "wealthy-only" tax cut and that unless he can hold the universal tax cut hostage, he doesn't have the leverage he needs to get get the upper-income tax cut signed into law. That's why he opposes decoupling the high-income tax cuts from the tax cuts that go to everybody (including high income earners, albeit only on their first $250,000 of income).
President Obama's position is that we shouldn't hold tax cuts for everybody hostage in order to get tax cuts that only go to wealthiest 2%. He's said he's willing to compromise on a short-term extension of the upper-income tax cuts in exchange for a permanent extension of the across-the-board tax cuts, but that the price tag of a permanent extension of upper-income tax cuts -- $700 billion over the next decade -- is far too high a price to pay.
This is shaping up to be the first major legislative battle since Republicans took control of the House, and true to form, President Obama has bent over backwards signaling his willingness to work with Republicans and even that he'll compromise as long as Republicans are willing to compromise as well. But as Eric Cantor is making clear, Republicans are refusing to compromise.
How this episode plays out will tell us a lot about how things will work (or, perhaps, not work) with the new GOP majority in the House. Will they become serious about being partners in governing (fat chance, I know) or will they continue to play the role of spoilers and saboteurs even now that they control the levers of power in the House of Representatives?