House Majority Leader Eric Cantor, R-Va., suggested his party would be flexible about closing corporate loopholes as part of a comprehensive package to raise the $14.3 trillion debt ceiling only if they were accompanied by offsetting tax cuts. He made the statement to emphasize the Republican position that tax hikes are off the table in advance of Thursday's meeting with President Obama.
“If the President wants to talk loopholes, I’m glad to talk loopholes,” Cantor told reporters on Capitol Hill Wednesday. “We’ve said all along that preferences in the code are not something that helps economic growth overall.”
Republicans have been facing heat on their refusal to include even modest revenue increases as part of a deficit reduction package. Democrats have been pushing for tax increases and were quick to pounce on Cantor’s remarks.
“Our focus on tax loopholes seems to be putting Republicans on their heels on the issue of revenues,” Sen. Chuck Schumer, D-N.Y., said in a statement. “But if Republicans are going to say we can only close these loopholes in a revenue-neutral way, it is like taking one step forward and then two steps back. The point isn’t to get rid of these loopholes simply to pay for new tax breaks elsewhere, it’s to do it in a way that contributes to the reduction of the debt.”
Tax cuts under consideration include the payroll tax holiday or changes to the alternative minimum wage tax. Until today, Republicans have insisted that closing tax loopholes should be considered part of broader tax reform to be discussed later in the year and not tied to a debt ceiling vote.
White House Spokesman Jay Carney said Wednesday that President Obama is confident that there are enough lawmakers from both parties to support a deal that would reduce the debt by more than $2 trillion over the next 10 years with spending cuts and tax increases.
As Republicans and Democrats continue to spar over tax increases, the clock is ticking to reach a deficit reduction deal in advance of the Treasury set August 2 deadline, when the federal government risks defaulting on its debt. The White House says both parties must reach an agreement by July 22 to round up enough votes in Congress and pass legislation before August 2. Republicans have demanded that the level of spending cuts match an increase in the debt ceiling dollar-for-dollar.
“I just find it interesting that the President wants to somehow suggest yet another date as if we have not been working towards a result for the last 6 or 7 weeks,” Cantor said. “I mean, come on. We should be looking at tomorrow as an opportunity, not just keep dangling some date and keep inching it backwards. That only contributes to the hyperbole around here. Let's get serious.”
Meanwhile, Senate Democrats proposed legislation to end wasteful tax breaks for millionaires. The resolution states: “any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.” Democrats hope to vote on the legislation this week. “Don’t let the fat cat sit there purring away,” Sen. Frank Lautenberg, D-N.J., told reporters.
While Cantor suggested Republicans may be shifting to break on loopholes, his colleagues in the Senate weren’t so quick to follow. Senate Minority Whip Jon Kyl, R-Ariz., dodged whether he would support closing loopholes.
“Most of us have agreed that if we can get genuine tax reform to make the tax code more pro-growth that would be a very great thing to do,” he told reporters. “One thing would be to reduce the number of special provisions, deductions and credits of that sort so by eliminating those reduce rates. That’s the goal.”
Kyl and Cantor were members of the bipartisan Joe Biden-led deficit reduction group that crumbled two weeks ago after they both dropped out. Speaking for the first time since the seven member group dissolved, Cantor was insistent that the gang did not break up over tax loopholes but rather “there was an impasse that clearly the other side wished to impose tax hikes on small businesses and families in this country”.
The Biden gang had met for six consecutive weeks and made considerable progress on the deficit reduction front--identifying $2 trillion in budget savings. Cantor said he sees their work as a blueprint for hammering out the final deal. “That deal is still in the works and I believe it is still there and I believe we can deliver on it,” he said.
Meanwhile, Senators Ron Wyden, D-Ore., and Dan Coats, R-Ind., sent a letter to the President and Congressional leaders participating in tomorrow’s debt ceiling negotiations outlining how comprehensive tax reform would make it possible for both parties to move past the current partisan stalemate. In the letter, the Senators wrote singling out programs and tax breaks for elimination, will not – by themselves – resolve the debt crisis or “guarantee that Congress and the White House won’t be locked in a similar stalemate next month or next year.”
House Minority Whip Steny Hoyer, D-Md., suggested that he is willing to take a multi step approach to raise the debt ceiling with one vote or up to as many as three votes as a down payment on a long term goal in order to prevent the U.S. from default.
“I’m prepared to vote for something that can A: keep us from defaulting, B: if that’s all I can vote for, I’ll vote for that,” Hoyer told reporters on Capitol Hill. “The key is something that is responsible, effective, default preventing and keeping in faith with the [Bowles Simpson] commission said with the most vulnerable in America.”
Hoyer is pushing for a $4 trillion deficit reduction over 10 years including revenues and expenditures, but he said he is willing to vote for something less if there were only 218 votes in the House to pass the measure.
The No. 2 Democrat in the House echoed the President’s remarks from yesterday, urging Republicans to put everything on the table. “We cannot get there from here without putting everything on the table which includes revenues, entitlements and discretionary spending.” Revenues must be part of a deficit reduction package because the federal government is collecting revenues as a percent of GDP at the lowest time since the 1950s, he said.
Read more on the debt ceiling from The Fiscal Times
Heat Is on the GOP as “No New Taxes” Scuttle Deal (The Fiscal Times)
How Republicans Stoked Economic Uncertainty (The Fiscal Times)
Three Reasons Conservatives Must Cut a Debt Limit Deal (The Fiscal Times)