Are the Republicans Going Soft on Taxes?

A Senate vote on ethanol could signal a shift in the GOP's thinking on taxes.

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ATR and like-minded conservatives claim that the ethanol subsidy vote doesn't signal any radical change in Republican thinking. In fact, the ATR did change its position on the ethanol tax vote as it neared passage, claiming that senators were free to vote for it without dishonoring their pledge, so long as they also voted for an amendment that would have eliminated federal mandates for ethanol fuel production, and also would have eliminated the estate tax. That amendment never came up for a vote in the Senate. "Coburn cherry-picked a particularly nasty piece of policy here, that none of us agree should be in the tax code," Ellis says, noting that most of the $1.2 trillion in tax deductions are much broader and effect the middle class, such as the deduction for mortgage interest. Eliminating those without a tax offset is a tax hike, Ellis argued. "You keeping your own money is not the same thing as the government taking your money," he says. [Slide Show: 5 Bright Spots in the U.S. Economy]

Without a grand bargain including entitlement and tax overhauls, staffers predict that a debt ceiling compromise will likely be smaller, which could force lawmakers to revisit the issue again soon. Such short-term extensions helped give Congress some breathing room while they were debating the budget earlier this year. But economists warn that short-term debt ceiling increases could rattle the market. How the Republicans resolve this internal debate will go a long way toward solving the debt ceiling issue—and shaping America's long-term fiscal future.

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