White House insists taxes must be part of the debt and deficit solution
As debt talks shift to Obama, GOP Speaker John Boehner, and Democratic Senate leader Harry Reid, taxes remain the logjam. No one wants to be seen as giving ground on that issue too quickly.
(Page 2 of 2)
“The theatrics that McConnell and Boehner have to play out in the wake of the Cantor-Kyl walkout is tougher, because they have to show that they are holier – or tea partier – than they,” says Stan Collender, a budget expert with Qorvis Communications in Washington. “The White House has nothing to lose by raising the stakes on taxes, because Boehner and McConnell can’t agree to anything for another three weeks or so. If they come up with a deal too early that’s not to the tea party’s liking, they’ll say [Boehner and McConnell] didn’t bargain hard enough.”Skip to next paragraph
Subscribe Today to the Monitor
Republicans blame the debt crisis on a government that spends too much. The threat of default by Aug. 2, if Congress fails to raise the $14.3 trillion national debt limit, is a historic opportunity to force a change of course, GOP leaders say. Any increase in taxes blunts the drive to cut the size and scope of government.
Democrats say the problem is that government is taking in historically low tax revenues, especially after the Bush-era tax cuts. The solution to the current debt crisis is a “balanced approach” that includes both spending cuts and tax increases, especially those that target the wealthiest taxpayers, Big Oil companies, and firms that outsource jobs overseas.
“Please listen to the overwhelming majority of the American people who believe that deficit reduction must be about shared sacrifice,” said Sen. Bernard Sanders (I) of Vermont in a letter to the president on Sunday. “The wealthiest Americans and the most profitable corporations in this country must pay their fair share.” A member of the Senate Budget Committee, Senator Sanders is releasing a plan that calls for tax increases to account for at least half of any debt- and deficit-reduction plan.
From a policy perspective, both sides can claim that economic data support their claims. US tax revenues are at a post-World War II low as a percentage of the nation’s gross domestic product, now standing at 14.4 percent for fiscal year 2011, according to the White House Office of Management and Budget.
In part, that’s due to the Bush tax cuts, as Democrats say, says Chuck Marr, director of federal tax policy with the Center on Budget and Policy Priorities. But it’s also due to the weak economy, a GOP talking point.
“The US economy is extremely weak now, and the logic is you don’t want to raise taxes. But you don’t want to cut spending, either. It’s worse to do that,” he says.
RECOMMENDED: National debt ceiling 101: Is a crisis looming?