As GOP Shows Flexibility, Obama Adopts Hard Tone

Wednesday, 06 Jul 2011 05:47 PM

 

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WASHINGTON (AP) — As a top House Republican signaled new flexibility on White House demands to close wasteful or ineffective tax loopholes, President Barack Obama responded with some of his harshest political rhetoric to date in advance of a Thursday negotiating session on the budget.

Wednesday's salvo came hours after House Majority Leader Eric Cantor, R-Va., opened the door to closing wasteful or unfair tax loopholes in the battle over a must-pass proposal to increase the government's borrowing authority. Obama suggested that Republicans are using the debt limit measure "as a gun against the heads" of Americans to retain breaks for corporate jet owners or oil and gas companies.

"If the president wants to talk loopholes, we'll be glad to talk loopholes," Cantor said, adding that revenues raised from those revisions "should be coupled with offsetting tax cuts somewhere else."

Shortly thereafter, at a White House Twitter town hall, Obama fired a sharp response. It was far more partisan than the language he used Tuesday to invite top lawmakers in both parties to the White House to move the budget talks forward. They've been stalled since a bipartisan group led by Vice President Joe Biden broke up last month after Republicans declared an impasse on taxes.

"The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jet owners or oil and gas companies that are making billions of dollars," Obama said. "I'm happy to have those debates. I think the American people are on my side on this."

Obama is seeking to reduce the deficit, in part, through new tax revenue raised by closing loopholes and tax subsidies. Among the examples the White House cites are tax benefits for companies that buy corporate jets. He also has called for ending subsidies to oil and gas companies, a proposal that would generate about $40 billion in revenue over 10 years.

At the same time, Cantor's comments reflected important, if nuanced, flexibility for Republicans. His earlier position was that closing loopholes should wait for a comprehensive overhaul of the tax code.

Cantor declined to specify what tax cuts should be financed by any new loophole-related revenues. He declined to rule out using them to extend expiring tax cuts, such as a credit for new research and development that's popular with businesses.

The show of flexibility comes in advance of Thursday's meeting between Obama and top congressional leaders to raise the debt limit and avoid a historic default.

White House spokesman Jay Carney said Wednesday that Obama is confident he has enough lawmakers behind him to reduce the debt by more than $2 trillion over the next 10 years.

"The president believes, we believe, that there are enough members of both parties in both houses who support the idea that a big deal has to be balanced and therefore include spending cuts in the tax code," Carney said.

The assertion reinforced and expanded on Obama's comments Tuesday that back-channel talks with congressional leaders last weekend made progress in advance of Thursday's talks. But Carney cautioned that no final deal should be expected.

The president is siding with House Speaker John Boehner in insisting that negotiators resist the temptation to "kick the can down the road" and settle for a makeshift, short-term solution to stave off the U.S.' first default next month.

At issue is the need to raise the government's so-called debt limit to avoid a default on its obligations to bondholders and Social Security beneficiaries. Republicans want deficit cuts in the range of at least $2.4 trillion over 10 years to offset the amount of new government borrowing needed simply to avoid another vote before 2013.

Obama, answering questions Thursday posed through the Twitter online social network, pushed aside a question over whether he would use the 14th Amendment to raise the debt ceiling by executive order, a suggestion floated by some Democrats.

The amendment states: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

Obama said: "I don't think we should even get to the constitutional issue. Congress has a responsibility to make sure we pay our bills. We've always paid them in the past. The notion that the United States would default on its debt is just irresponsible."

Obama met with Boehner on Sunday for the first time since Republicans last month abandoned the Biden-led negotiations. Carney on Wednesday declined to discuss Sunday's meeting, refusing even to acknowledge that it had occurred. He said the talks had a better chance of success if Sunday's details were kept under wraps.

The administration says that if the government's borrowing authority is not increased by Aug. 2, the U.S. will face a historic first default, potentially throwing financial markets into turmoil.

Obama isn't calling for increases in tax rates. On Tuesday, the president urged Republicans to agree to eliminate "certain tax breaks and deductions for the wealthiest of Americans", those in the 35 percent tax bracket.

Boehner attacked the proposal that day as an assault on small businesses but was subdued on questions like oil and gas subsidies or a much-publicized tax provision that gives favorable treatment to companies that buy corporate jets.

"We're not dealing just with talking points about corporate jets or other 'loopholes,'" Boehner, R-Ohio, said. "The legislation the president has asked for, which would increase taxes on small businesses and destroy more American jobs, cannot pass the House, as I have stated repeatedly."

_____

Associated Press writer Jim Kuhnhenn contributed to this report.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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