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McConnell Rules Out Tax Increases In Debt Limit Deal

Senate Minority Leader Mitch McConnell, R-Ky., was upbeat Thursday after he and other Republican senators met with President Obama at the White House to discuss the conditions under which Congress will vote on increasing the country’s debt limit, but repeated his position — shared by House Speaker John Boehner, R-Ohio — that any increase in the debt ceiling will include spending cuts and no tax increases.

“Candidly, I was a little skeptical as to whether this meeting was worth having. But I actually think it was a very good meeting. It gave the president the opportunity to have Republican senators tell him directly how they see this. Everyone did it very respectfully, we didn’t have a big food fight in there,” McConnell said.

McConnell said he would only vote for a deal to raise the country’s borrowing limit, which will expire in early August, according to Treasury Secretary Timothy Geithner, if it cut discretionary spending in the short term, pushed discretionary and entitlement spending downward over time, and addressed long-term entitlement spending — Medicare, Social Security and Medicaid.

“We are talking here about spending reductions, there will be no tax increases in connection with raising the debt ceiling,” he said. “The only question remaining is what will we pick up and agree to on a bipartisan basis?” He added that the period of time in for which the limit will be extended is also under negotiation.

Sen. Mitch McConnell, R-Ky.

Jim Lehrer will interview McConnell Thursday evening on the NewsHour.

As the national debt approaches the $14.3 trillion limit — about the size of the American economy — politicians from both sides of the aisle have been proposing ways to reduce that debt and the annual deficit, estimated this year to be $1.6 trillion.

President Obama met with Senate Democrats Wednesday on the same topic in an effort to help bring both sides together on a much-needed compromise: failure to raise the limit means the risk of the U.S. defaulting on its loans, raising interest rates. Not raising the limit would be “catastrophic” to the economy, according to Geithner.

“I think what we’re going to end up having to do probably — is to set some targets, and say — you know, those targets have to be hit if not automatically, some cuts and tax increases start taking place. And that will give incentive for us to negotiate — and figure something out,” Mr. Obama said during a town hall event with CBS News.

Senate Majority Leader Harry Reid, D-Nev., said the president urged Democrats to not draw a line in the sand on the negotiations, the Washington Post reported. Much of the debate on Capitol Hill this week has focused on how to reduce gas prices, which hover around $4 a gallon nationally. Democrats have decried billions in tax breaks given to the oil industry, while Republicans have voted to increase domestic oil drilling.

Reid tied the issue of tax breaks for oil companies to the debt and deficit reduction debate in a speech on the Senate floor Thursday.

“If we’re serious about reducing the deficit, this is an easy place to start. It’s a no-brainer. Taxpayer giveaways to companies pulling in record profits are the epitome of wasteful spending,” Reid said. “So this is Democrats’ idea: Let’s use the savings from these taxpayer giveaways to drive down the deficit, not drive up oil company profits.”

While the debt ceiling negotiations are conducted in private, as are bipartisan deficit reduction talks among the Gang of Six, a group of senators from both sides of the aisle, one can glean from President Obama’s recent speech in which he endorsed finding ways to reduce Medicare spending via a government panel and allowing the tax cuts he extended in late 2010 — which were originally enacted by President Bush — to expire in 2012.

Republicans have rejected any call to increase taxes and House Republicans supported a plan that would both reduce taxes from current levels and turn Medicare into a subsidy program for private health insurance.

McConnell reiterated Thursday that believes debt ceiling negotiations, done in the context of divided government, present the best opportunity to make major progress on the debt and deficit issue.

“If you’re looking for an example think of (House Speaker)Tip O’Neil and Ronald Reagan in (19)83 when they fixed Social Security for a generation, think of Bill Clinton and the Republicans on welfare reform in (19)96. Think of Bill Clinton and the Republicans actually balancing the budget in the late nineties, seems like ancient history now,” McConnell said.

“Divided government, when neither party controls the entire government, is the best time…and some would argue the only time, when you can do really big stuff,” he added.

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