Surrender: McConnell Prepares to Raise the White Flag on Taxes

Senate Minority Leader Mitch McConnell is privately signaling that Senate Republicans are open to a strategy that would effectively allow the Bush-era tax rates for high earners to expire in order to avert the year-end fiscal cliff.

At a dinner with lobbyists Thursday night, McConnell disclosed that Senate Republicans were eyeing a so-called “two-bill strategy” increasingly being pushed by lawmakers in both parties, according to multiple sources in the room.

The idea would be to advance two bills, giving each party an opportunity to vote on the approach they favored, but only one would be signed into law: The extension of the Bush-era rates for families who earn less than $250,000 annually.

But House Republicans haven’t bought into this scenario yet, the latest divide between the House and Senate GOP in the already tense negotiations.

Under one possible scenario, the House would take up a Senate-passed bill to extend the Bush-era rates for all but the top 2 percent of wage earners and increase taxes on capital gains and dividends from 15 percent to 20 percent, sending that to President Barack Obama’s desk on the backs of Democratic votes in the House.

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