Sparring Continues on Capitol Hill as Lawmakers Prepare to Meet with Obama
Lawmakers are continuing to stake their claim on two very different solutions to the deficit problem as leaders from both parties in both chambers of Congress prepare to meet with President Obama to continue talks on extending the nation’s debt limit while reducing the deficit.
The Senate remained in session — despite a planned 4th of July recess — and most senators were talking about federal spending and tax priorities as Congress approaches the White House’s self-imposed July 22 deadline to approve a debt limit extension plan or risk severe economic consequences. The House was debating a bill on funding for the Department of Defense.
While Republicans continued their insistence that any agreement to raise the debt limit contain no increase in taxes, Democrats repeated a call for an approach that included an increase in tax revenue as well as spending cuts.
The Senate debated a “sense of the Senate” resolution Wednesday that said that Americans who make more than $1 million a year or more should make a “more meaningful contribution” to reducing the deficit.
Sen. Chuck Schumer, D-N.Y., highlighted on Wednesday his party’s take on one of the public squabbles surrounding the debt limit talks: whether or not Republicans would consider eliminating certain tax breaks, such as those for corporate jets or the oil and gas industry, as part of a deficit deal.
“The Republican leader has continued to insist that we can’t raise a single dollar in revenue no matter how wasteful the tax break or how generous the subsidy,” Schumer said on the Senate floor. “In the home stretch of negotiations, our Republican colleagues seem willing to tank the economy rather than end a single tax subsidy,” Schumer said.
House Majority Leader Eric Cantor, R-Va., said Wednesday that he did not walk out of the bipartisan debt limit talks in June over those loopholes, but instead because of the insistence of Democrats in those talks that taxes be raised. He clarified that any change in the tax code that raises revenue would need to be met with a corresponding tax cut.
“If the president wants to talk loopholes, we’ll be glad to talk loopholes. We’ve said all along that preferences in the code aren’t something that helps economic growth overall. But, listen, we are not for any proposal that increases taxes, and any type of discussion should be coupled with offsetting tax cuts somewhere else,” Cantor said.
Cantor, who will meet with Mr. Obama Thursday along with other House and Senate leaders, said he was looking toward the meeting as an opportunity for a deal on cutting at least $2 trillion from the federal deficit.
His Republican colleagues in the Senate added their views to the tax debate as well, making it clear that they weren’t going to endorse any sort of tax increase, no matter how small.
Senate Republican Whip Jon Kyl, R-Ariz., who will be on hand for Thursday’s talks, said “[t]he only rationale that the president, vice president and the others who have been negotiating in the sessions that I’ve been involved in, for raising taxes…the only rationale for raising taxes is to raise revenue, not to make the tax code more coherent. We’ve said the place to modify the tax code is not in the context in which you’re trying to raise revenue but where you’re trying to make it coherent and pro-growth.”
Senate Minority Leader Mitch McConnell, R-Ky., added that eliminating tax breaks on certain industries could cost jobs in those industries.
“When you target particular industries you get fewer jobs. And the biggest problem we have right now is the jobs problem,” McConnell said. “I’m open to tax reform. We need to do it broadly. To cherry pick items in the context of this current negotiation with the White House strikes me as pretty challenging,” he said.
Sen. Debbie Stabenow, D-Mich., said Democrats want Republicans to work toward a solution that doesn’t put the burden of deficit reduction on the middle class.
“Republicans target seniors and the middle class while protecting special treatment for special interests and millionaires and billionaires,” she said Wednesday.
While we don’t know what will be said at Thursday’s White House meeting, we do know that the leaders involved want the issue of raising or not raising tax revenue to be a big part of the public debate over how to raise the debt ceiling. While Republicans want to keep any debt ceiling deal to cuts only, Democrats want to add some sort of bump in revenue to any final agreement. Right now, those appear to be incompatible positions.