President Presses Congressional Leaders for Major Deficit Deal

President Obama on July 11 said he will continue to push congressional leaders for the “largest possible deal” on reducing the federal deficit even though he faces resistance from Democrats on reducing spending on entitlement programs and from Republicans opposed to raising taxes. Obama, in a news conference, took pains to point out that White House negotiators have not advanced proposals to raise revenue in 2011 or 2012 and that the first tax increases would not start until 2013.

“Nobody is looking to raise taxes right now. We’re talking about potentially 2013 and the out-years,” Obama declared.

Tax Reform

If Republicans do not support a broader package that would end high-income tax breaks when they expire at the end of 2012, the president said he is open to working with GOP lawmakers on tax reform that could “potentially lower everybody’s rates and broaden the base.” However, any overhaul of the tax code must be “sufficiently progressive” and not contain tax loopholes that benefit hedge fund managers, corporate jet owners or continue oil and gas subsidies, Obama noted.

Debt Limit

On raising the debt ceiling, Obama said he opposes any 30-day, 60-day, 90-day or 180-day “temporary stopgap resolution” and predicted that negotiators ultimately will agree to increase the debt limit “for a reasonable period of time.” However, when asked by a reporter, the president fell short of pledging to veto a short-term debt limit increase and only noted that a temporary measure is “not acceptable.”

“We’re going to come up with a plan that solves our short-term debt and deficit problems, avoids default, stabilizes the economy and proves to the American people that we can actually get things done in this country and in this town,” Obama asserted. The president said he will meet with congressional leaders daily and through the weekend, if necessary, to reach a deficit-reduction deal that can be passed into law by August 2.

“Let’s act now and get this problem off the table.” Obama said, prior to another meeting with congressional leaders. The president continued to call for a deal in the range of $4 trillion over 10 years despite House Speaker John Boehner’s, R-Ohio, statement, issued late on July 9, calling for a “smaller measure” than they had been privately discussing together.

Boehner said he believes the best approach would be to pursue talks on spending cuts identified in the Biden-led negotiations, which he said “still meets our call for spending reforms and cuts greater than the amount of any debt-limit increase.” Both the Biden group discussions and Boehner’s attempt at a grand bargain with the president reached an impasse over GOP opposition to including revenue increases.

Weekend Negotiations

Negotiations to increase the debt limit sputtered over the July 9 weekend when Boehner walked out of talks with Obama over the issue of raising taxes. However, talks had resumed by late on Monday, July 11, as Obama and GOP leaders held individual press conferences to reaffirm their bargaining positions while expressing confidence in their ability to reach the goal of raising the nation’s $14.2-trillion debt limit by August 2.

House Majority Leader Eric Cantor, R-Va., said the Republican goal is to “cut spending more than what we raise the debt limit without raising taxes. And that is the goal.” Cantor told reporters that deal worked out during the earlier talks with Vice President Biden include roughly $2 trillion in spending cuts from mandatory and discretionary programs as well as lower interest payments. But Cantor warned that the debt ceiling would not be raised as long as the president wants to raise taxes. Moreover, fiscally conservative Republicans are making a sacrifice just by agreeing to vote for a debt-limit increase, Cantor said.

House Minority Whip Steny H. Hoyer, D-Md., charged that GOP lawmakers were not making a shared sacrifice by only insisting on spending cuts in entitlement programs for the poor and elderly without addressing tax cuts that affect more affluent Americans. Hoyer asked Republican lawmakers to remain at the negotiating table and work with Democrats on a deal to address the debt crisis in a serious way.

By Paula Cruickshank and Stephen K. Cooper, CCH News Staff


Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting