Tags: Ryan | Schumer | tax | bipartisan

Schumer Stands in Way of Ryan's Bipartisan Tax Plans

By    |   Monday, 15 October 2012 12:00 PM

GOP vice presidential nominee Paul Ryan says that if he and Mitt Romney are able to capture the White House, a bipartisan tax agreement may well ensue.

But the obstructionist attitude of powerful Democratic Sen. Charles Schumer may guarantee that doesn’t happen.

The tax reform issue has taken on greater urgency with the approach of the dreaded fiscal cliff. Tax rates will automatically soar and spending will  plunge if Congress fails to take action before Jan. 1.

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Experts say the country is largely ignoring the issue at its peril. “Markets appear to underestimate the potential for panic in the run-up to the cliff, the possibility of the nation falling off the edge, and the cliff’s impact on economic growth,” according to a report by BlackRock, the world’s biggest money management firm.

One financial markets participant who doesn’t underestimate the fiscal cliff’s magnitude is Mohamed El-Erian, CEO of Pimco, which manages the world’s biggest mutual fund. A jump over the cliff would surely send the U.S. economy into recession, he said in a speech Oct. 3.

"You get close to a situation where for the first time in a very long time, our kids' generation will be worse off than ours,: he said. "So this is really important."

Ryan told The Journal that he and Romney would be willing to cooperate with Democrats to implement tax reform, including Romney's proposal for a 20 percent drop in individual rates.

While the two parties have gone after each other tooth and nail during this campaign, Ryan maintains that he and Romney both have a history of working well with Democrats that would make possible an agreement between the two sides.

For example, Ryan and Sen. Ron Wyden, D-Ore., co-authored a plan on Medicare reform, the House Budget Committee chairman notes. "We have a history of bipartisan consensus on these major reforms that we think are necessary to prevent a debt crisis to grow the economy. It's just that we have a huge barrier right now to realizing that — President Obama." He said Democratic Senate Majority Leader Harry Reid is also "part of that barrier."

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Ryan defended Romney’s decision to refrain from revealing now which tax breaks he would eliminate to help finance the 20 percent reduction.

"We shouldn't be negotiating the details of tax reform in the middle of a campaign," Ryan said.

"What we've learned from experience — Mitt's experience as governor, my experience doing tax law — is that you don't go to Congress and say, 'Take it or leave it; here's my plan—pass it.’"

Instead, "You say, 'here’s my framework, here's my objectives. Now, let's figure out together how to accomplish these objectives.' That's how you maximize the possibility of getting things done," Ryan said.

So would the Romney administration accept some kind of tax increase proposed by Democrats if it accompanies a tax rate decrease and a reduction in entitlement spending?

Ryan didn’t answer directly. "It's not as if Republicans haven't offered this before," he told The Journal. The Wisconsin congressman cited a proposal last year from Sen. Pat Toomey, R-Pa., which would have generated $300 billion in new tax revenue.

"But we think the best way to raise revenues is to grow the economy," Ryan said.

In addition to the 20 percent slashing of individual rates, the Romney plan calls for a 10 percentage-point reduction of business rates, no increase in taxes on the middle class and no reduction in the share of taxes paid by the wealthy.

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But Schumer may be the fly in the ointment that prevents any of this from happening," the Journal said in an editorial. “The polls say voters want more bipartisanship, and one possibility in 2013 is tax reform that trades lower rates for fewer loopholes.”

“Well, so much for that. The man who wants to be the next leader of the Senate Democrats has declared that this ‘old-style of tax reform is obsolete.’" Schumer is the No. 3 Democrat in the Senate and is known to have designs on the top spot.

Schumer won’t accept the kind of reform crafted by former President Ronald Reagan and Democrats in 1986, he said in a speech last week.

“That’s because there are two new conditions that didn't exist in 1986, but are staring us in the face today," he said. "A much larger, more dangerous deficit and a dramatic increase in income inequality. Old-style tax reform could make both conditions worse."

And as the 1986 model, which sought to eliminate tax credits and deductions to finance across-the-board rate cuts, is the basis for both the Simpson-Bowles framework and the outline released last year by the “Gang of Six” senators, Schumer opposes those two efforts as well.

What Schumer really seeks is higher taxes and higher spending, The Journal editors say.

His true target is income inequality. “The affluent simply make too much money, so they must have more of it taken away and redistributed by Mr. Schumer.”

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And it wouldn’t even work, because Congress would pass loopholes to ease the burden on the rich, and as a member of the Senate Finance Committee, Schumer would facilitate that process, the editorial argues.

“If Mitt Romney wins, Mr. Schumer will browbeat any Democrat who even thinks about supporting a Simpson-Bowles-Reagan-style reform. If President Obama wins, the Senator will fight the kind of tax deal that House Speaker John Boehner has said he wants as part of a grand budget compromise. Who's the real partisan obstructionist?”

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GOP vice presidential nominee Paul Ryan says that if he and Mitt Romney are able to capture the White House, a bipartisan tax agreement may well ensue.
Monday, 15 October 2012 12:00 PM
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