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Fiscal cliff could prompt some in GOP to renege on tax pledge

WASHINGTON – Key Republicans, ranging from the House majority leader to Rep. Tom Reed, R-Corning, signaled some willingness Monday to move away from a decades-old pledge signed by nearly all federal GOP candidates that they would not raise taxes in any way, shape or form.

With the nation approaching a “fiscal cliff” on Dec. 31, when taxes will rise dramatically and spending will be slashed unless a divided Congress reaches a compromise, GOP lawmakers appeared to be moving, however slightly and in varying degrees, toward President Obama’s insistence that the wealthy pay more in taxes.

For example, House Majority Leader Eric Cantor, of Virginia, told MSNBC: “When I go to the constituents that have re-elected me, it is not about that pledge. It really is about trying to solve problems.”

Cantor refused to go further and specifically say he was willing to break the pledge pushed for decades by Grover Norquist of Americans for Tax Reform, but other Republicans did.

Reed, a member of the tax-writing Ways and Means Committee who is seen as a bridge between GOP leadership and lawmakers elected with tea-party backing, told reporters on a conference call: “I would say the pledge is not a barrier to a deal.”

That deal would have to ensure that any new revenue would not go to cover an increase in spending and would have to include an additional $1 trillion in deficit reduction, said Reed, who complained that Democrats have not yet agreed to those two points.

The shift in Republican rhetoric on taxes came as the White House released a dire report indicating the economic impact if the nation tumbles over the fiscal cliff:

• The average family would suddenly pay $2,200 more in taxes next year, and growth in consumer spending could fall by 1.7 percentage points, the White House said.

• Meanwhile, economic growth, which has run at about 2 percent annually since the Great Recession, would most likely fall by 1.4 percentage points in 2013.

• The report also echoed concerns from multiple economists, including Federal Reserve Chairman Ben Bernanke, that the fiscal cliff’s automatic tax increases and spending cuts, which would take about $500 billion out of the economy in one year alone, could push the nation back into recession.

Facing such dire prospects, and with only about a month left to strike a deal with Democrats to avert the fiscal cliff, some Republicans are going much farther than Cantor and Reed in vowing to break the pledge they signed.

“The only pledge we should be making to each other is to avoid becoming Greece,” Sen. Lindsey Graham of South Carolina said Sunday on “This Week” on ABC. “And Republicans should put revenue on the table.”

Meanwhile, Sen. Bob Corker of Tennessee said on CBS: “I’m not obligated on the pledge. I made Tennesseans aware – I was just elected – [that] the only thing I’m honoring is the oath I take when I serve, when I’m sworn in this January.”

Sen. Saxby Chambliss, R-Ga., also agreed to break the pledge, as did Rep. Pete King, R-N.Y., who told NBC: “A pledge you signed 20 years ago, 18 years ago, is for that Congress … The world has changed, and the economic situation is different.”

The pledge supposedly binds lawmakers to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses” and “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

In contrast to the pledge, Reed said, “what we’ve said in the last few weeks is that we will consider revenue on the wealthier segment of American society, and we are open to that, and we’ll continue to take that position.”

While Obama has insisted on higher tax rates for upper-income wage earners, Reed and others in the GOP ranks have resisted such a move, instead showing a willingness to raise revenues by limiting deductions.

Meanwhile, billionaire investor Warren E. Buffett, whose company, Berkshire Hathaway Inc., owns The Buffalo News and who is The News’ chairman, agreed that the rich should pay more. In an opinion piece in the New York Times, he called for repealing the George W. Bush-era tax cuts for people earning over $500,000 a year and setting a minimum tax rate of 30 percent on taxable income between $1 million and $10 million, and 35 percent on higher amounts.

“A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours,” Buffett said. “Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy.”

Norquist was nonplussed by all the sudden talk – even among Republicans – of raising revenues. Noting that some Republicans expressed willingness to break the pledge during debt-ceiling negotiations in 2011, only to hold fast to it in the end, Norquist said the same thing was likely this time.

“We’ve got some people discussing impure thoughts on national television,” Norquist said.

But Cantor indicated that the newly evolving Republican stance on taxes is a recognition of reality, a recognition of what will happen if Congress does not find a way to steer the nation back from the fiscal cliff.

“If we don’t do anything, come Jan. 1, 2013, there’s a lot of people paying a lot more” in taxes, Cantor said.

News wire services contributed to this report. email: