[Marxism] President Looks for Broader Deal on Deficit Cuts

Greg McDonald gregmc59 at gmail.com
Thu Jul 7 03:28:48 MDT 2011


President Looks for Broader Deal on Deficit Cuts
Published: July 6, 2011

WASHINGTON — Heading into a crucial negotiating session on a budget
deal on Thursday, President Obama has raised his sights and wants to
strike a far-reaching agreement on cutting the federal deficit as
Speaker John A. Boehner has signaled new willingness to bargain on

Mr. Obama, who is to meet at the White House with the bipartisan
leadership of Congress in an effort to work out an agreement to raise
the federal debt limit, wants to move well beyond the $2 trillion in
savings sought in earlier negotiations and seek perhaps twice as much
over the next decade, Democratic officials briefed on the negotiations
said Wednesday.

The president’s renewed efforts follow what knowledgeable officials
said was an overture from Mr. Boehner, who met secretly with Mr. Obama
last weekend, to consider as much as $1 trillion in unspecified new
revenues as part of an overhaul of tax laws in exchange for an
agreement that made substantial spending cuts, including in such
social programs as Medicare and Medicaid and Social Security —
programs that had been off the table.

The intensifying negotiations between the president and the speaker
have Congressional Democrats growing anxious, worried they will be
asked to accept a deal that is too heavily tilted toward Republican
efforts and produces too little new revenue relative to the magnitude
of the cuts.

Congressional Democrats said they were caught off guard by the weekend
White House visit of Mr. Boehner — a meeting the administration still
refused to acknowledge on Wednesday — and Senate Democrats raised
concerns at a private party luncheon on Wednesday.

House Democrats have their own fears about the negotiations, which
they expressed in an hourlong meeting Wednesday night with Treasury
Secretary Timothy F. Geithner.

“Depending on what they decide to recommend, they may not have
Democrats,” Senator Sheldon Whitehouse, a Rhode Island Democrat, said
in an interview. “I think it is a risky thing for the White House to
basically take the bet that we can be presented with something at the
last minute and we will go for it.”

Officials said Mr. Boehner suggested that he was open to the
possibility of $1 trillion or more in new revenue that would be
generated by addressing tax issues already raised in the talks, like
killing breaks for the oil and gas industry, eliminating ethanol
subsidies and ending preferential treatment for corporate jets.

But those changes would fall far short of the revenue goal, and the
source of the rest of the money would, under what they described as
Mr. Boehner’s proposal, be decided by Congress through a review of tax
law changes. One official said some revenue could be generated by
allowing Bush-era tax cuts for affluent Americans to expire at the end
of 2012, which would produce hundreds of billions of dollars, though
those savings would be offset by the costs of retaining lower rates
for those below the income threshold.

Aides to Mr. Boehner said that no tax increases were on the table and
that he had not agreed to the expiration of any tax cuts.

One source familiar with the talks said the speaker had put forward
options on how to proceed, including making a commitment to a tax code
overhaul that would lower rates while closing loopholes, ending
deductions and instituting other changes to generate substantial new
revenue. Mr. Boehner has in the past pushed tax simplification as a
way to help the economy.

Democrats were distrustful of Mr. Boehner’s idea, saying such an
approach raises the prospect that future tax and revenue changes could
be blocked by Republicans after Democrats had already agreed to the
detailed cuts. They sought assurances that all the elements of any
budget deal would be enacted simultaneously.

“We want as robust a deficit reduction deal as possible,” said David
Krone, chief of staff to Senator Harry Reid of Nevada, the majority
leader, who would serve as point man for moving any agreement through
the Senate. “But it has to be balanced between spending and revenues,
in terms of timing, specificity and dollars.”

Democrats are not just worried about the substantial policy issues at
stake; they are also concerned about the political implications of any
deal as they try to hold control of the Senate next year and win back
the House.

To the degree that any deal wins bipartisan support on slowing the
growth of Medicare, for example, it would deprive Democrats of what
has been one of their most potent arguments heading into 2012: their
assertion that Republicans would gut the traditional Medicare system
and leave older Americans vulnerable to rapidly rising health care

Faced with the prospect that the federal government would default on
its credit obligations, Democrats might indeed be cajoled into backing
an agreement they did not strongly support. But at the moment, there
is substantial private and public grumbling about what looms ahead.

Senator Bernard Sanders, independent of Vermont, urged the president
not to yield to Republican demands to reduce the deficit by cutting
hundreds of billions of dollars from Medicare, Medicaid and other
domestic spending. He said that “the president has got to demand that
at least 50 percent of deficit reduction come from revenues,”
including higher taxes on the wealthy and large corporations.

At the same time, Representative Eric Cantor, the Virginia Republican
and majority leader, said Wednesday that he would not accept any net
increase in federal revenues, and that any money raised from
eliminating tax breaks or loopholes must be offset by cuts elsewhere
in the tax code.

“If the president wants to talk loopholes, we’ll be glad to talk
loopholes,” Mr. Cantor said. “We have said all along that preferences
in the code are not something that helps economic growth over all.
But, listen, we are not for any proposal that increases taxes. Any
type of discussion should be coupled with offsetting tax cuts
somewhere else.”

White House officials acknowledge the unrest among Democrats. But they
argue that Democrats will be in stronger shape politically heading
into November 2012 if they help enact a credible deficit reduction
deal, allowing them to mount the argument that they protected Medicare
from a much more drastic overhaul by Republicans.

In contrast, they say, failure to produce an agreement could bring
unpredictable and unfavorable economic and political consequences.

The officials are convinced that a larger package — one that would
demand deeper cuts and more taxes but put the nation on a sounder
fiscal footing for a decade or longer — is more politically palatable
than the $2 trillion-plus package that was being cobbled together in
talks presided over by Vice President Joseph R. Biden Jr.

 And not all Democrats see the push for a major package as a negative.

“We don’t need a minideal,” Senator Richard J. Durbin of Illinois, the
No. 2 Democrat, said Wednesday on the Senate floor. “We need something
that speaks authoritatively to the world that the United States
understands its deficit challenge and is prepared to make the hard
choices to address it.”

Robert Pear contributed reporting.

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