Aides: GOP looks at 2 tax bills

WASHINGTON — Senate Republicans are discussing a legislative strategy to break the U.S. budget stalemate that would let Congress extend tax cuts for all except the highest income levels, said two Republican aides who spoke on condition of anonymity.

Under this scenario, the House would vote on two separate bills, the aides said. One would extend tax cuts for all income levels. That would have wide Republican support though President Barack Obama has said he won’t accept it.

The other bill would allow tax cuts for top earners to expire, as Obama demands.Democrats would support that plan and Republicans would be likely to provide enough votes to pass it in the House, one aide said. The Democratic-controlled Senate would pass and send that measure to Obama, the aide said.

Such an approach would let Republicans go on record in support of extending all of the George W. Bush-era tax cuts even as enough of them would join Democrats to pass Obama’s plan.

Obama and House Speaker John Boehner, an Ohio Republican, met at the White House on Thursday for almost an hour to discuss the budget, with no public announcement of progress. In January, more than $600 billion in spending cuts and tax increases, the “fiscal cliff,” are scheduled to begin unless the president and Congress agree on a way to avert them.

White House press secretary Jay Carney declined to comment on the possible strategy, saying “there are a lot of ideas floated” at the Capitol.

“What we have yet to see is a proposal of any kind with any kind of specificity,” Carney said.

Thursday’s White House meeting, which included Treasury Secretary Timothy Geithner, didn’t close the gap between Obama’s demand for higher taxes for top earners and Boehner’s call for deeper spending cuts, said a Republican congressional aide who spoke on condition of anonymity.

Obama wants to extend tax cuts now for income up to $200,000 a year for individuals and $250,000 for married couples. Some Senate Republicans have discussed acceding to Obama’s demand if the president and Boehner can’t reach a budget deal by year’s end.

“It seems to me getting that off the table would be helpful,” Maine’s Republican Sen. Susan Collins said in an interview. “Everyone agrees that should be done.”

Several House Republicans, notably Oklahoma’s Rep. Tom Cole, have suggested allowing the top rates to increase as a legislative tactic.

Boehner spokesman Michael Steel declined to comment. Boehner, during his weekly news conference Thursday, didn’t rule out allowing a House vote on extending tax cuts for income up to $250,000 a year for married couples, as Obama has demanded, if a broader tax-and-spending deal isn’t reached soon.

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in an e-mail Friday that “Republicans will continue to look for ways to protect American families and jobs while strengthening entitlement programs and continuing to advocate for the types of intelligent reforms in Washington spending that the president has yet to propose.”

McConnell “does not advocate raising taxes on anybody or anything,” Stewartsaid.

Obama and congressional Democrats say they won’t discuss spending cuts unless Republicans agree to higher tax rates for top earners. Republicans are insisting on reductions to entitlement programs such as Medicare.

White House and congressional officials told their staffs this week that they may be spending the holidays in Washington, as both sides publicly refused to budge from their positions. Boehner is traveling to his home state of Ohio for the weekend.

Meanwhile, the top Republican tax-writers in Congress warned business groups that supporting Obama’s tax plan may cost them a chance at cutting the corporate tax rate.

“The practical reality is that there simply is not enough money on the individual side of the tax code to achieve the size of tax increases the president is seeking,” Rep. Dave Camp and Sen. Orrin Hatch wrote Friday in a letter to the Business Roundtable and the National Federation of Independent Business.

“In endorsing the president’s push for higher tax rates, you are also risking some of your own top priorities for tax reform,” such as reducing taxes on profits earned overseas and the corporate tax rate, they wrote.

The letter follows a Business Roundtable letter signed by more than 150 chief executive officers Tuesday that expressed openness to tax rate increases for individuals.

Camp, a Michigan Republican, is chairman of the House Ways and Means Committee. Hatch, of Utah, is the top Republican on the Senate Finance Committee.

Additionally, the incoming House Rules Committee chairman said congressional Republicans would be willing to accept an increase in tax rates for top earners if Democrats make significant reductions in entitlement programs such as Social Security and Medicare.

“If it’s a good deal, yes,” Rep. Pete Sessions, R-Texas, said on Bloomberg Television’s Political Capital With Al Hunt, when asked whether he’d accept a trade-off involving tax rates. “If it does something long term that betters the circumstances.” Information for this article was contributed by Richard Rubin, Heidi Przybyla, Roger Runningen, Kristin Jensen and Jonathan D. Salant of Bloomberg News.