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In Efforts to Find a Budget Solution, Lawmakers Debate Tax Hikes, Entitlements

November 27, 2012 at 12:00 AM EDT
Congress and the White House face an uphill battle in forging a federal budget solution in order to avoid the automatic sequestration cuts in January 2013. Jeffrey Brown talks to House Representatives Keith Ellison, D-Minn., and Tom Price, R-Ga., about the likely proposals, challenges and compromises expected.
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JEFFREY BROWN: Washington’s struggle to avoid going off the fiscal cliff resumed in earnest today. The president moved to draw on his reelection victory for new clout with Congress, the goal, a sweeping deficit agreement to avert $650 billion in spending cuts and tax increases at the start of 2013.

From the White House came word that President Obama will try to build public pressure on Congress to raise taxes on the wealthy and prevent tax hikes for everyone else.

White House spokesman Jay Carney:

JAY CARNEY, White House: Well, the president believes very strongly that the American people matter in this debate, because this debate is about them.

The question of whether or not taxes go up on 98 percent of American taxpayers is very important to ordinary Americans. It is not just a matter for discussion between the president and the Senate minority leader or other congressional leaders.

JEFFREY BROWN: To that end, the president met privately today with small business owners. On Friday, he will travel to the Philadelphia area to speak further on the issue.

Not to be outdone, House Republicans said they will meet with small business owners and workers in their districts arguing against the president’s plan.

And in the Senate, Republican Minority Leader Mitch McConnell dismissed the president’s new tactics.

SEN. MITCH MCCONNELL, R-Ky.: As we head into the fiscal cliff negotiations, my advice to the president would be — it seems like our friends on the other side are having some difficulty turning off the campaign. We need to sit down and work this matter out. I think we have a clear sense that there’s an opportunity here at the end of the year to do something important for the country.

JEFFREY BROWN: At the same time, there were some signs on both sides of the aisle that there might be a little give in previous positions.

Republican Senator Bob Corker of Tennessee outlined his proposal in The Washington Post. He called for tax revenue increases, including a cap on itemized deductions, coupled with curbs on Social Security and Medicare benefits. Corker joined several Republican senators and House members who have suggested they might abandon a longstanding pledge not to raise taxes.

But the author of that pledge, conservative lobbyist Grover Norquist, played down any hint he’s losing influence. He called it — quote — “a complete media-created frenzy.”

On the left, Democratic Senator Dick Durbin of Illinois urged liberal groups to give way on their opposition to changes in Medicare and Medicaid.

SEN. RICHARD DURBIN, D-Ill.: We cannot stand by on the sidelines in denial that this is ever going to engage us in the things that we value. We can’t be so naive as to believe that just taxing the rich is going to solve our problems. We have to look to reform and change that is significant, that preserves many of the values and programs that brought us to political life.

JEFFREY BROWN: For his part, Senate Majority Leader Harry Reid declared himself extremely hopeful, even as the end of the year and the end of the current Congress rapidly approach.

As this debate has unfolded, we have been sampling a variety of voices on what should be done.

Tonight, we’re joined by two congressmen coming at this from very different directions.

Tom Price of Georgia is chairman of the Republican Policy Committee. Democrat Keith Ellison of Minnesota is co-chair of the Congressional Progressive Caucus.

I spoke with them a short time ago from the CannonHouseOfficeBuilding.

Congressmen, welcome.

Congressman Price, let’s start with taxes, because there’s been much talk in recent days about whether your party is ready to move away from that no tax increase pledge put forward by Grover Norquist. Are conservative House Republicans ready to do that? Do you feel bound by that pledge?

REP. TOM PRICE, R-Ga.: Well, tax rates going up, having tax rates go up is not wise for the economy.

What we have put on the table in our past two budgets are to address tax revenues, having revenues increase by way of closing the loopholes, limiting the deductions, limiting the credits, making certain that we lower the tax rates for everybody and broaden the base.

That actually gets the economy rolling again, so that we can grow the revenue of the federal government by having pro-growth policies.

Now, the other side of this is the spending. And that hasn’t been addressed by the president. So, we wait for the president to be able to put his spending reductions on the table.

JEFFREY BROWN: Let me just ask you to stay on the taxes for a minute, because when you talk about revenues, not rates, are there enough details there? Because a lot of budget experts will say that closing loopholes like that won’t be enough, until we know exactly what those loopholes are.

TOM PRICE: Well, what we do know are the rate increases that have been recommended by the president get enough money to run the federal government for eight days, not eight months, not eight weeks, eight days.

So, this seems to be a political activity by the president, not something that actually solves the problem. We’re interested in real solutions. So, when we’re talking with the other side, what we want to make certain is that what we’re discussing are real solutions, things that will actually get us rolling again, get the economy rolling again, get jobs created. That’s where we’d like to have the discussion based right now.

JEFFREY BROWN: All right, let me ask Keith Ellison.

First, well, on the taxes, what’s your view of looking at tax revenues, as opposed to rates, as the president is proposing?

REP. KEITH ELLISON, D-Minn.: I think we need to look at both. We need to look at raising rates on the top 2 percent back to the Clinton era rates, in which our economy did very well.

But I do agree we need to close some loopholes as well. We need a balanced approach. But we have already done about $1.5 trillion in cuts. And so what we’re looking for is some revenue generated by either closing loopholes or raising rates on the top 2 percent.

I think we need a balanced approach.

And we have seen our economy thrive even during times when rates were higher. So, I don’t see any reason why we wouldn’t want to take that step forward. We’re serious and believe that we need to come together and try to hammer out a solution, and not let the American people go past Dec. 31.

JEFFREY BROWN: Well, let me ask you, Keith Ellison, about another side of this, because your — Congressional Progressive Caucus put out a statement that any deal on taxes and spending — quote — “shouldn’t cut Medicare, Medicaid or Social Security benefits.”

Now, does that include what might be called reforms such as raising eligibility ages? Is there any room there for some give?

KEITH ELLISON: Well, we don’t believe there’s any reason to cut benefits to people who are receiving Medicare and — Medicare, Social Security.

But we could do some things like raise the cap on Social Security, or we could allow Medicare Part D to negotiate drug prices like the VA already does. There are ways to find waste, fraud and abuse and make some changes that will get more benefits to more people.

But making the most vulnerable people in our society bear the burden of this fiscal problem that we’re in right now I think is unfair. And it really wouldn’t help our economy much.

JEFFREY BROWN: Let me ask — let me bring in Tom Price on that, on the entitlements question.

KEITH ELLISON: Sure.

JEFFREY BROWN: But what kind of specific cuts to benefits or changes to the system do you think are required? How deep?

TOM PRICE: Well, please understand that current law, the president’s law right now, the law of the land makes it so that Medicare, Medicaid and Social Security all are on a road to insolvency.

That’s the current law. So, we believe that those three programs, Medicare, Medicaid and Social Security need to be saved and strengthened and secured. And through our budget proposal that we have had out the last two years, we have put forward a proposal that actually makes it so that current retirees, current Medicare recipients see no change whatsoever.

But in fact we save and secure the program for future generations, that the Medicaid program, which again is on a path to insolvency, and states are complaining vociferously about this, that we actually save that program from a financial standpoint.

And there are wonderful proposals on the table about solving and saving Social Security. So, you can’t address the spending issues without fundamental, real form and real solutions for Medicare, Medicaid and Social Security.

JEFFREY BROWN: But won’t those — just to stay with you, won’t those be unpopular? After this election, do you think enough has changed to make those kinds of changes to the system?

TOM PRICE: Well, I will tell you what it is unpopular is the insolvency of the program, is having all three programs go away. And that’s current law. That’s under the president’s law and the law that has been adopted by this Congress previously.

So, what we need to do is real solutions. We’re happy to talk about whatever the other side wants to talk about, whatever the president wants to talk about, as long as it’s addressing real solutions. There’s no reason to do the political side right now. What the American people said on Nov. 6 is get back to Washington and solve the challenges that we have.

JEFFREY BROWN: Well, Mr. Ellison, I mean, I think everybody talks about real changes here after the election. But do you see any changes in the rhetoric or in the actual proposals that suggest that we have moved somewhat from the election?

KEITH ELLISON: Well, you know, the things that my friend Dr. Price is talking are things that were up for debate during the election and were roundly rejected.

I think it’s time to say we need a balanced approach. We have already cut $1.5 trillion already. And so now we need some revenue enhancements. And we need — that can be rates and closing loopholes to do both.

But I must disagree that the proposals out there about Medicaid and Medicare are good. They’re actually not very good.

The American people weighed in on them, as both candidates in the election offered their views.

And I think the American people found the president’s proposals much stronger and didn’t want to voucherize or block-grant Medicare and Medicaid.

JEFFREY BROWN: Yes, go ahead.

TOM PRICE: It’s important to appreciate that whatever mandate the president and the Democratic Party believe they have is no greater or less than the mandate that we have as House Republicans.

The American people said on Nov. 6 they don’t want party — they don’t want government of one-party rule. What they want is divided government. They have given us the challenge to go back and solve these challenges. And the way that we do that is together in a deliberative process.

And so that’s what I would hope that my friend Mr. Ellison would embrace with his party and the folks in the Senate and at the White House to be able to come together and work together and solve these challenges.

KEITH ELLISON: We do embrace talking about this.

JEFFREY BROWN: Yes, you do embrace that.

But let me just ask, Mr. Ellison, on that mandate question, would it be better, do you think, to have no deal than one that you think goes against whatever mandate came out of the election?

KEITH ELLISON: Let me tell you, I think that it is the responsibility of House Republicans, House Democrats, senators, both parties, and the president to try to reach a deal.

I don’t think that we should completely abandon things that are core values. But I think everybody has to be trying earnestly to get to a solution that makes sense for the American people. I don’t subscribe to the idea we just let it go over the cliff. I think we should try to work hard on it.

But we’re not going to allow the most vulnerable Americans to shoulder the burden of this fiscal problem. And so those two things, I think, we have got to struggle with.

And I think Dr. Price is right. We have got to talk and continue to talk about these things, understanding that there is a solution, but it’s going to require some flexibility.

We have already gone for $1.5 trillion worth of cuts. I want to see what the other side is ready to do.

JEFFREY BROWN: All right, Keith Ellison of Minnesota, Tom Price of Georgia, thank you both very much.

TOM PRICE: Thank you.

We have already gone for $1.5 trillion worth of cuts. I want to see what the other side is ready to do. 

JEFFREY BROWN: All right, Keith Ellison of Minnesota, Tom Price of Georgia, thank you both very much.

TOM PRICE: Thank you.