LAS VEGAS -- Some Republican governors are softening on the party's hard-line toward tax increases for the wealthy, suggesting that GOP congressmen at least be open to rate hikes in exchange for a comprehensive fiscal agreement on taxes and entitlements.
"The people have spoken, I think we're going to have to be [flexible] now," said Virginia Gov. Bob McDonnell, when asked if his party would now have to be open to taxes on the highest earners. "Elections do have consequences. The president campaigned on that."
McDonnell, the outgoing head of the Republican Governors Association, made clear that raising taxes isn't his first choice. But he said that the political reality of a Democratic president and Democratic Senate makes it unlikely that a grand bargain can be struck without some compromise on raising revenues.
"As a piece of an overall package with tax reform that is more comprehensive, I think it's something that absolutely has got to be discussed," he said of tax hikes for the wealthy in an interview at the traditional post-election GOP governors' conference here. "We're in deep, deep trouble in America right now and I think with the president in power there's no way to get a budget solution that's spending cuts only."
Former Mississippi Gov. Haley Barbour, one of the most influential Republicans in the country, echoed McDonnell's assessment that Republicans should be open to upping the rates of the top filers in exchange for significant Democratic concessions on Social Security, Medicare and deficit reduction.
"If there's enough savings, if there's enough entitlement reform, if there's enough certainty about tax reform in the next few years, I would," Barbour said when asked whether his party should consider softening its opposition to letting the Bush tax cuts on the wealthiest expire.
Like McDonnell, the Mississippian indicated he'd rather not raise the top rate, calling it "bad economics" that could "hurt the recovery."
But Barbour also bowed to pragmatism.
"You can't be purist," Barbour said, adding: "If we don't do something now about entitlement reform it gets harder next year."
To hear such GOP heavyweights edge away from the Grover Norquist line is somewhat jarring. However, it underlines what many elite Republicans see as the urgent policy and political demands of the moment.
Idaho Gov. Butch Otter, a former longtime member of Congress, also warmed to higher rates for the wealthy in exchange for major Democratic concessions.
"If I got a lot of the things that I wanted, yeah I'd be willing to make that accommodation," said Otter.
That talk has made it easier for the governors to warm to a deal.
"I already hear some of the Republican leadership talking about going to $500,000 or maybe $750,000, you know moving off the $250,000," said Otter, alluding the prospect of raising the threshold for higher rates.
The GOP governors, however, counseled their congressional counterparts to not concede on the tax rates until they know what Obama and the Democrats are willing to offer in exchange.
"I want to see what they're going to get for it," said Otter.
Iowa Gov. Terry Branstad raised the specter of President George H.W. Bush's tax-and-spending deal with congressional Democrats, noting that significant spending cuts never came to fruition. But Branstad also argued that Republicans should consider compromise on the revenue side of the ledger in exchange for a substantial fiscal agreement.
"I do think that if you can get something that is a truly significant reduction in spending -- real spending reductions and reform -- and it does include some increase in revenue, yeah, then I think they should do that," said Branstad. "I think we should not risk this fiscal cliff that the president and the Congress have put us in."
New Jersey Gov. Chris Christie, who is up for reelection in 2013 and considered a possible 2016 presidential contender, said: "I don't even want to address rate increases until I see what the president is willing to do on spending."
But such talk, resolute as it may sound, shows some cracks in the GOP wall against taxes. Putting the onus on Obama to deliver isn't the same as saying "hell no" on any rate increases.
Above all, it's recognition that President Obama, with 332 electoral votes to his name, holds a stronger political hand now in Washington. And these Republicans are convinced that the country is on a perilous financial course and must reach an accord on taxes-and-spending.
But, more subtly, it's a signal to Republican senators and congressman that they not be seen as obstructing a coveted grand bargain because they want to protect an unpopular constituency -- the rich. The likes of McDonnell, Barbour and the other GOP governors here know that Romney and the rest of the 2012 Republican ticket were badly hurt by being defined as fighting for the privileged. If they fell on their swords to stop a rate increase on the highest earners, it would only perpetuate that perception and give Democrats more fodder.
The softening from the state capitals comes as Republican members of Congress are also indicating that they're willing to compromise on taxes as the December 31st expiration of all the Bush tax cuts nears.
"[Obama has] got to lay out what he wants his deal to be and we negotiate from there," Christie added. "Whether we should accept or not depends on what else happens, you got to look at the entire deal as a whole."
As for how sacrosanct taxes are, Christie said: "Raising rates shouldn't be something we should be looking to do."
That's the same line offered up by nearly every Republican governor. But that they're not urging GOP members of Congress to fight to political death on the issue is far more telling. Many governors dodged the question or talked in generalities.
"I'm going to let John Boehner decide this," said Ohio Gov. John Kasich, after dutifully noting his dislike for tax increases.
Kasich, the former House Budget chairman, added: "When people want to reach an agreement they figure it out where both sides have some sort of a win."
Asked if new federal tax revenue should be taken off the table, Maine Gov. Paul LePage said: "I'm not saying that. I'm not in Washington. Let the people in Washington make that decision."
North Carolina Gov.-elect Pat McCrory also shrugged.
"I don't know," he said, when asked if tax increases on the rich can be avoided in a fiscal cliff deal.
Florida Gov Rick Scott, asked about the top rates, didn't address the question and discussed the importance of job creation.
"They have to say, 'I'm 100 percent focused on how I get the economy going,'" Scott said. "Is what I'm doing going to create more jobs for Americans or not?"
Pressed on the question at hand he said, "Whatever that means for tax rates I'm going to do it, whatever that means for spending that's what I'm going to do," he said about economic development.
McDonnell, though, was clear-eyed about the seeming inevitability that any major agreement will include tax hikes for the wealthy.
"Clearly, overwhelmingly people in America believe that raising rates on people that are in the upper income is part of the mix, the president is supporting that," said the Virginian. "And I think the reality is something like that is going to be part of a final deal."
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