On the eve of a meeting between President Obama and congressional leaders of both parties, Senate Democrats launched a campaign to increasetaxes on individuals earning over $1 million a year in order to help reduce the federal deficit. The measure reflects, in part, a provision in President Obama’s fiscal year 2012 budget proposal, which calls for limiting certain taxexpenditures for high-income earners by capping itemized deductions at 28 percent.
The Senate on July 6 took up the resolution, not a bill, which declares that “it is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.”
“Will we be the kind of country that protects tax breaks and giveaways for the richest people and corporations while sacrificing seniors and the middle-class?” asked Senate Majority Leader Harry Reid, D-Nev., prior to the Senatetaking up the resolution. The resolution is one of many salvos in the Democrats’ campaign to portray Republicans as willing to protect the wealthy at the expense of the middle-class in hopes of breaking their resolve to keep tax increases out of the debt-reduction talks.
As Democrats turned up the heat on Republicans prior to the talks with Obama, Republicans fired back with missives of their own. Senate Minority Leader Mitch McConnell, R-Ky., labeled talk of tax increases as “ludicrous” and said he hopes the discussions with the White House would be more productive. “It’s an opportunity to see if the president is finally willing to agree on a serious plan topay our bills without killing jobs in the process,” said McConnell. “Until now, the president’s proposals have been inadequate and, frankly, indefensible.”
House Speaker John Boehner, R-Ohio said in an earlier statement that discussions with Obama will be “fruitless until the president recognizes economic and legislative reality,” as he asserted that the administration’s proposal to raise the debt ceiling will never pass the House. Boehner said the deficit should be addressed without added tax hikes and he criticized Obama for relying on “talking points about corporate jets or other “loopholes.”
The Biden working group on deficit reduction ended because Democrats insisted on raising taxes in a slow economy and House Republicans made it clear that such an agreement could never win their support, House Majority Leader Eric Cantor, R-Va., said on July 6. Speaking to reporters during his weekly briefing, Cantor insisted that he did not walk out of the bipartisan talks over closing a tax loophole for corporate jets. He said Republicans are ready toreach an agreement on the deficit during the White House talks scheduled for July 7, rather than wait for the president’s new deadline of July 22. “We’ve said all along that preferences in the code aren’t something that helps economic growth overall,” he said. “But, listen, we are not for any proposal that increasestaxes, and any type of discussion should be coupled with offsetting tax cuts somewhere else.”
Cantor said voters would not appreciate a deal where trillions of dollars in spending cuts are balanced by a few hundred dollars of tax increases. That would be a signal to Americans that the Washington culture of more spending has not changed, he explained. “It is like throwing good money after bad to say we need to go raise more revenues before we change the system,” he said. In response to Cantor’s remarks, Sen. Charles E. Schumer, D-N.Y., faulted GOP lawmakers for only supporting the end of corporate loopholes on a revenue-neutral basis. “It is like taking one step forward and then two steps back,”Schumer charged. “The point isn’t to get rid of these loopholes simply to pay for new tax breaks elsewhere; it’s to do it in a way that contributes to the reduction of the debt.”
President Obama on July 6 held firm on his position that tax increases must be part of a deal. “What we need to do is have a balanced approach where everything is on the table,” Obama said during his first “Twitter” town hall meeting, where he fielded several questions from tweets that focused largely onjobs, housing and fiscal policy.
The president did not weigh in on an idea circulating in Washington as a possible fall-back measure for averting a government default if deficit and debt talks collapse. Because section 4 of the 14th Amendment of the U.S. Constitution states that “the validity of the public debt…shall not be questioned,”one school of thought maintains that it is unconstitutional for Congress tointerfere with the Treasury Department taking whatever steps are necessary tomeet U.S. debt obligations.
When asked if he would issue an Executive Order to raise the debt ceiling pursuant to section 4 of the 14th Amendment, Obama said “I don’t think we should even get to the constitutional issue. Congress has a responsibility tomake sure we pay our bills,” the president said. “My expectation is that over the next week to two weeks, Congress—working with the White House—[will] come up with a deal that solves our deficit, solves our debt problems, and makes sure that our full faith and credit is protected,” he said.
By Jeff Carlson, Stephen K. Cooper and Paula Cruickshank, CCH News Staff
Legislation to Express the Sense of the Senate on Shared Sacrifice in Resolving the Budget Deficit, Sen 1323