Lawmakers Harden Positions on Taxes, Spending

Friday, 24 Jun 2011 02:12 PM

 

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WASHINGTON (Reuters) - Republicans and Democrats dug in their heels Friday as President Barack Obama prepared to wade into a divisive debate over taxes and spending aimed at heading off a default on the U.S. government's debt.

The White House said Obama will meet separately with Senate Democratic and Republican leaders Monday in an effort to resurrect negotiations that collapsed when Republicans walked out on Thursday over Democrats' demands for tax hikes.

"The president is willing to make tough choices but he cannot ask the middle class and seniors to bear all the burden for deficit reduction and sacrifice while millionaires and billionaires ... are let off the hook," said White House spokesman Jay Carney aboard Air Force One.

Republicans Friday ruled out any tax increases as part of an agreement to narrow stubborn budget deficits and raise the U.S. debt limit. The federal deficit now stands at $1.4 trillion, among the highest levels relative to the economy since World War Two.

Boehner and Republicans say any package that includes tax increases stands no chance of passing the Republican-controlled House. Senate Republicans threaten to block the measure if it includes tax increases.

"A tax hike can't pass the Congress. They might as well ask us to herd unicorns through the Senate chamber," said Don Stewart, spokesman for Senate Republican leader Mitch McConnell. "It just can't happen."

The $14.3 trillion U.S. debt ceiling must be increased before Aug. 2 or the Treasury Department will run out of money to pay the country's bills. A default on debt payments could send markets plunging around the world and raise the risk of another U.S. recession.

Conservatives in Congress, including many Tea Party activists who are credited with winning the House for Republicans in the 2010 election, have questioned whether there really is a pressing need to increase the debt limit. They have laid down tough prerequisites to win their votes, including passage of a balanced budget amendment to the Constitution.

Democrats have expanded their demands in recent days to say any package must include measures to boost the struggling economy, which could add to the deficit. They say they will not support a package that relies only on spending cuts.

"Make no mistake. there needs to be revenues in any deal," said Charles Schumer, a member of the Senate Democratic leadership.

Treasury Secretary Timothy Geithner said he was confident Congress can still reach a budget deal, but that it would have to include some tax hikes.

"You need to have modest changes in revenue," Geithner said in New Hampshire. "There is no way to do a deal without it."=

 

ON THE TABLE

Democrats have eased back from their insistence that personal income tax rates need to rise on the wealthiest Americans to focus instead on ending a wide range of tax breaks on everything from corporate jets to oil and gas subsidies.

They have also proposed closing tax breaks that benefit the wealthy, such as limiting the deductions for households making more than $500,000 a year.

The Washington Post reported Democrats were seeking about $400 billion in new tax revenues on companies and the wealthy.

Representative Chris Van Hollen, one of the Democrats who was involved in the failed talks led by Vice President Joe Biden, said Republicans have refused to budge.

"What we've seen is all take and no give," he said.

Boehner said if Obama offers up spending cuts that are at least the size of a debt limit increase -- thought to be around $2 trillion to $2.5 trillion -- and if new budget reforms are put in place, "He has my word that the House will act on it."

These are requirements Boehner and fellow Republican leaders have been voicing for months.

"We believe that we can move forward, as long as no one in these talks takes a my-way-or-the-highway approach," Carney said.

© 2014 Thomson/Reuters. All rights reserved.

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