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Debt Panelists Draw Skepticism on Partisanship, Tax Stances

Wednesday, 10 Aug 2011 04:03 PM

 

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U.S. House Speaker John Boehner and Senate Republican leader Mitch McConnell announced their appointments to a 12-member committee assigned with finding $1.5 trillion in budget savings, a lineup already drawing skepticism about the chances for a bipartisan debt compromise.

Republican Senators Jon Kyl, Pat Toomey and Rob Portman will work with Senate Democrats Patty Murray, John Kerry and Max Baucus, who were chosen yesterday by Senate Democratic Leader Harry Reid. Boehner today picked House Ways and Means Committee Chairman Dave Camp, Energy and Commerce Committee Chairman Fred Upton and Republican Conference head Jeb Hensarling. House Democratic leader Nancy Pelosi has yet to name her panelists.

The choices from both parties include some “land mines,” increasing the likelihood of deadlock, said Robert Bixby, head of the Concord Coalition, an Arlington, Virginia-based group that advocates for a balanced budget.

Murray, of Washington state, will cause “certain alarm bells to go off” because she heads the Democrats’ campaign to elect senators, Bixby said. Toomey, of Pennsylvania, and Hensarling, of Texas, are committed to not raising taxes. Upton’s panel has taken the lead on investigating President Barack Obama’s agenda, including the new health-care law. And all six Republican appointees have signed a pledge by Americans for Tax Reform against voting to raise taxes.

‘Not Auspicious’

“This is not auspicious for a grand bargain,” Bixby said.

The panel’s work has taken on greater urgency since Standard & Poor’s on Aug. 5 lowered the U.S.’s AAA credit rating for the first time, saying lawmakers weren’t doing enough to reduce record deficits by raising taxes or cutting spending. The so-called super committee will be the central focus of political and lobbying activity in Washington for the next four months, as every industry tries to protect its interests.

The committee was created in the law signed Aug. 2 by Obama that raised the U.S. debt limit to avoid a default. Unless the panel pushes through a deficit-reduction package by year’s end, $1.2 trillion in automatic, across-the-board spending cuts will be triggered over a decade, starting in 2013 and targeting defense and non-defense programs. The 12 committee members need a simple majority to make a recommendation.

Revenue Dispute

All three senators named by Reid have said revenue increases should be part of a debt plan. Republican leaders reject that, saying the panel should look only at spending cuts.

Three of the appointees who served on a fiscal commission that Obama set up last year -- Baucus, Camp and Hensarling -- voted against that panel’s bipartisan plan to rewrite the tax code and trim entitlement benefits. Kyl, of Arizona, was the lead Senate Republican negotiator in debt talks led by Vice President Joe Biden. He ruled out tax increases as part of a final compromise.

“I’m discouraged today,” said Bill Hoagland, a budget adviser to Republican congressional leaders from 1982 to 2007. “This is going to be an uphill battle to find a majority out of this group. It’s going to be a very difficult challenge.”

Bixby and Hoagland identified Portman, of Ohio, who served as budget director for President George W. Bush, as a potential dealmaker willing to work across the political aisle.

Roadblock

Grover Norquist, president of Americans for Tax Reform, said the Republican negotiating team will serve as an effective roadblock to tax increases.

“Taxes are off the table for this super-committee even more than they were when Boehner and Mitch McConnell” were negotiating with the president for a long-term debt agreement, Norquist said. “We’re now going to focus on spending cuts, and if the Democrats can’t do that, we’ll have the automatic cuts.”

Toomey served as president of the Club for Growth, an anti- tax group, after three House terms and a failed Senate bid in 2004. He won a Senate seat in 2010, helped by the surge of anti- government fervor embodied in the Tea Party movement.

His home state of Pennsylvania has 81 military installations and industries dominated by industrial, consumer services, financial and health-care companies, according to Bloomberg Government data. Defense and health-care programs are likely to be among the biggest targets for spending cuts.

‘Counterproductive’

“I am not interested in some kind of big tax increase,” Toomey told reporters on a conference call today. “That would be counterproductive, that would harm our economic growth.”

Upton, as chairman of the energy and commerce committee, has led investigations into Obama’s policies, including how federal economic-stimulus funds were used. In the past, though, he has joined in bipartisan efforts, such as expanding the State Children’s Health Insurance Program.

His Michigan district is home to major health-care and industrial companies, according to Bloomberg Government data. Health professionals, retired people and employees of electric utilities have been the biggest source of political donations for Upton during his career, according to the Center for Responsive Politics.

Kyl has a long record of pressing for tax cuts.

In June, he followed House Majority Leader Eric Cantor in walking out of the Biden talks amid a dispute over raising taxes, saying the White House and Democrats were “insisting on job-killing tax hikes and new spending.”

Corporate Taxes

A month earlier, he said on the Senate floor: “We can reduce the corporate tax rate were we to eliminate what some call loopholes, and thereby reduce the amount of money we have to collect through the tax rate itself.”

Industrial, consumer services and financial companies make up the biggest industries in Kyl’s home state of Arizona, Bloomberg Government data shows.

Portman was one of 64 senators from both parties who signed a letter to Obama in March asking him to look at spending cuts, changes to entitlements and an overhaul of the tax code when pushing for a deficit-reduction package.

Industrial, consumer services, financial and consumer goods companies are the biggest industry constituents in Portman’s home state of Ohio, according to Bloomberg Government data. The largest publicly traded companies are pharmaceutical distributor Cardinal Health Inc. in Dublin, Ohio, supermarket operator Kroger Co. and consumer-products maker Procter & Gamble Co., both in Cincinnati.

Balanced Budget

Hensarling advocates cutting government spending and balancing the federal budget, on occasion opposing the leadership of his party to fight government programs. In 2008, he led efforts to oppose the bailout of the financial system.

His Texas district is home to a number of energy companies, top among them Cubic Energy Inc. in Dallas, Wentworth Energy Inc. in Palestine, and Zion Oil and Gas Inc. in Dallas, according to Bloomberg Government data.

Camp has occasionally strayed from Republican stances on issues, supporting extended unemployment benefits in 2008 and the federal bailout of the automobile industry, a mainstay in his home state of Michigan. Still, he describes himself as “a conservative on fiscal policy.”

Health professionals make up the single biggest industry bloc of political donors to Camp over the years, followed by insurance and pharmaceutical and health products employees, according to the Center for Responsive Politics.

--With assistance from Alison Fitzgerald, Richard Rubin, Kathleen Hunter, Brian Faler and James Rowley in Washington. Editors: Mark McQuillan, Mark Silva

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

© Copyright 2014 Bloomberg News. All rights reserved.

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