How GOP could be forced to raise taxes this December

Some of Capitol Hill’s most conservative Republicans have a message for their party’s leadership: Don’t get trapped into a tax hike.

“We fear that without immediate, decisive action in the House of Representatives, the American people could soon find themselves in a perfect fiscal storm: a lame duck session of Congress with the looming threat of a government shutdown creating an unnecessary crisis for the purpose of forcing through tax and spending increases,” reads a letter, sent to sent to House Speaker John Boehner (R) of Ohio and Senate minority leader Mitch McConnell (R) of Kentucky, from 20 Republicans split roughly between the two houses.

How could the GOP get trapped into a tax hike? If Republicans keep on the current path, they argue, that’s very well where they could be headed.

The federal fiscal year ends on Sept. 30. So come this September, Congress is going to have to fund the government by continuing resolutions, or “CRs,” that roll funding for all government programs into a single massive bill. (Because of election-year politics, the chances of Congress actually passing a budget before Sept. 30 are virtually nil.) 

At present, the Republican letter-writers see a potentially deadly scenario come December. First, Congress passes a continuing resolution sometime before the fiscal year ends, funding the government through December. Then, Congress must come back into session after the November elections in order to handle government funding for the coming year.

It’s at this juncture – with the Bush tax cuts set to expire, the debt deal's budget-slashing "sequester" set to hit, and the government about to run out of funding – that Republicans stand a chance of getting backed into a corner. Democrats, they fear, could hold the threat of a government shutdown over their heads to win a concession like the expiration of tax cuts for household income over $250,000, a top priority for President Obama.

Democrats have promised they’ll allow some $600 billion in higher taxes and lower spending to take effect come Jan. 1 if Republicans don’t agree to raise taxes as part of a solution to the nation’s long-term fiscal issues.

“The only way to protect the taxpayers from this premeditated mugging is for the House to pass, before the August recess, a fiscally responsible continuing resolution to extend federal operations well into the new year,” the letter reads. 

Eleven senators have added their names to the missive, including conservative stalwarts (and tea party favorites) like Jim DeMint (R) of South Carolina, Rand Paul (R) of Kentucky, and Marco Rubio (R) of Florida along with the likes of John McCain (R) of Arizona.

In the House, the group is headlined by Rep. Jim Jordan (R) of Ohio, chairman of the Republican Study Committee, the largest and most conservative group of House legislators. It also includes Tom Graves (R) of Georgia, Mick Mulvaney (R) of South Carolina, and Marlin Stutzman (R) of Indiana, three of the chamber’s most conservative freshmen lawmakers.

Taken together, this is a group that has caused a great deal of trouble for GOP leaders by standing in the way of compromise legislation, such as raising the debt ceiling. 

Now, a senate GOP aide says the group is worried that the lame duck “will not yield any positive results for Republicans. [The GOP] is likely to have more Republicans in the next session [of Congress] so they don’t see the need to agree or negotiate with a weakened Democratic caucus.”

If Mr. Obama wins reelection, they reason, they will have little hope of avoiding some sort of tax hike in 2013.

But if presumed GOP contender Mitt Romney wins, they hope they won’t get trapped into making tax concessions to avoid the fallout of a government shutdown before Mr. Romney is sworn into office.