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Boehner Wants Bush Tax Cuts Extended for All

Wednesday, 03 Nov 2010 12:24 PM

U.S. House of Representatives Republican leader John Boehner said Wednesday that extending the Bush tax cuts for all income groups is the right policy.

Boehner, expected to become House speaker after Republicans took the House from the Democratic Party in Tuesday's elections, also told a news conference that he sees no problem working with Tea Party conservative members on Republicans' legislative priorities.

He also put a reduction of federal government spending at the top of Congress' agenda next year, a day after his party took control of the House.

"It's pretty clear the American people want us to do something about cutting spending here in Washington and helping to create an environment where we'll get jobs back," Boehner told reporters.

Republicans picked up at least 60 seats in Tuesday's elections to hold a solid majority in next year's House. Boehner is expected to get the top job of House speaker, supplanting Democrat Nancy Pelosi.

With last year's U.S. budget deficit at a whopping $1.29 trillion, equal to 8.9 percent of gross domestic product, voters have been clamoring for smaller, less expensive government.

Embracing that theme, House Republicans have promised to rein in government. In September, they said their first step would be to cut Washington's spending back to 2008 levels, a step that would not dry up very much of the red ink.

At the same time, Republicans have been pushing for bigger tax cuts than President Barack Obama wants, which would add more to the federal debt than would Democratic tax-cut proposals.

During his remarks to reporters on Wednesday, Boehner refused to go into detail on the spending cuts he would seek. Asked for the No. 1 spending cut on his list, the Ohio Republican would only say: "We'll make a lot of decisions over the coming months."

The first fight in Congress on spending priorities will be over the fiscal 2011 funding for across-the-board government activities. The debate over priorities for the fiscal year, which began on October 1, could resume as early as November 15, when the current Congress holds a post-election work session.

But if the outgoing Congress cannot reach a deal, spending priorities for the rest of the fiscal year will be fought out in January or February, after Republicans take control of the House from Democrats and a larger bloc of Republicans joins a Senate still under Democratic control.

BUSH TAX CUTS

The second major fight will be over what to do about the broad tax cuts that Republican President George W. Bush won nearly a decade ago that will expire at the end of this year if Congress does not act.

Republicans favor fully extending the lower rates while Obama and most Democrats back renewing them for the first $200,000 of everyone's income.

Taxes are levied marginally, so an individual making $250,000 only pays a higher rate on $50,000, the part of income above the $200,000 threshold.

Also up for expiration are tax increases on dividend and capital gains for high-earners.

"It comes down fundamentally to a question of: are Republicans willing to cut a deal on tax issues with Democrats to get them off the table temporarily, or whether they think they can get a better deal in January and February," said Clint Stretch, tax principal at Deloitte Tax and a former congressional staffer.

Wall Street until recently had been counting on a compromise, but in recent weeks many analysts said the prospects of inaction on the tax issues before January is rising.

For a deal on taxes, Obama would have to compromise as well, backing off of earlier opposition to keep rates lower on income above what he calls the middle class.

Boehner before the election said he would accept a temporary extension of the rates on the wealthier Americans, setting up a potential compromise with the administration. But subsequently, he said he wanted a permanent extension.

© 2017 Thomson/Reuters. All rights reserved.

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U.S. House of Representatives Republican leader John Boehner said Wednesday that extending the Bush tax cuts for all income groups is the right policy. Boehner, expected to become House speaker after Republicans took the House from the Democratic Party in Tuesday's...
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