The odds are good that Congress and President Barack Obama will reach a deficit-reduction deal by the end of the year if Republicans agree to increase tax rates for top earners, Maryland Representative Chris Van Hollen said.
“I think it’s better than 50 percent that we are able to get an agreement before Jan. 1,” Van Hollen, the top Democrat on the Budget Committee, said today at a Bloomberg Government panel in Washington.
Van Hollen said his confidence presumes that Republicans will yield on allowing the top tax rate to rise above the current 35 percent, which House Speaker John Boehner and other Republican leaders have opposed.
“If that doesn’t come true, it’s less than 50 percent,” Van Hollen said.
Congress and the president are trying to avert more than $600 billion in tax increases and spending cuts set to start in January -- the so-called fiscal cliff.
Speaking at today’s panel, Senator Mark Warner, a Virginia Democrat, Senator Bob Corker, a Tennessee Republican, and former Minnesota Governor Tim Pawlenty, a Republican, said they also think a budget deal will be reached this month.
Boehner, an Ohio Republican, stood firm today on keeping tax cuts for top earners, telling reporters at the Capitol that “there are ways to limit deductions, close loopholes” as alternatives that will provide the additional revenue Obama seeks as part of a deficit-reduction deal.
Unless Congress acts, taxes on income, capital gains, dividends and estates will rise and automatic federal spending cuts, known as sequestration, will begin in January.
“I think it’s 80 percent-plus that we will avoid sequestration,” said Warner, a member of a bipartisan group of senators who had been trying independently of congressional leaders to craft a broad plan.
Corker and Pawlenty said Obama has focused too much on taxes, and that to reach a deal, greater emphasis must be given to finding savings in entitlement programs, such as Medicare. Unlike the question of raising rates for top earners, on which most Democrats agree, congressional Democrats are divided over what changes to entitlement programs they could accept.
“You basically have a president, let’s face it, that not to be too pejorative, that’s been a one-trick pony,” Corker said. “The rate is all he’s been talking about.”
Pawlenty, president of the Financial Services Roundtable, a banking trade group, said the two sides must discuss “what can you live with, what is your red line and is there some overlap between those two things” to put a deal together.
“You can’t push people to a place where they can’t go, and leaders in negotiations have to understand that and communicate and figure out where the common space is,” Pawlenty said. “You can’t corner people with no way out because then you’ll have a failure.”
Corker said he hoped that “instead of spiking the ball” and letting the tax cuts expire, Obama would work personally with Boehner to hammer out an agreement.
“I hope they’ll sit down and mesh something together that Republicans could be OK with, that generates the kind of revenues that we need, but also the kind of entitlement reforms,” he said.
Boehner told reporters that Obama must respond to a $2.2 trillion plan the speaker proposed Dec. 3 to come up with a proposal that can pass the Republican-controlled House and the Senate, where Democrats have the majority.
“We need a response from the White House,” he said. “If the president doesn’t agree with our proposal and our outline, I think he’s got an obligation to send one to the Congress -- and a plan that can pass both chambers of Congress.”
Representative Tom Cole, an Oklahoma Republican, told reporters yesterday that Boehner would have to get most House Republicans on board for any plan he’d agree to with Obama.
“That is just politics 101,” Cole said. “When you are cutting a deal with the opposite party they’ve got, politically, to be able to sell this deal to the majority of their members.”
Cole has suggested his party accede to the Obama’s demand that Congress extend the tax cuts for families with incomes less than $250,000 a year while grappling with other issues -- an idea Boehner rejected.
Senator Charles Schumer of New York, the chamber’s third- ranking Democrat, told reporters today that “there are probably dozens of other Tom Coles in the House who don’t feel free to speak their mind.”
Republican Representative Dave Camp of Michigan, chairman of the tax-writing Ways and Means Committee, said his party’s leadership is working on a “comprehensive solution” to avert a possible fiscal crisis rather than focusing solely on the tax- rate issue.
“At this point it’s still how do we get to a comprehensive solution,” Camp, a Michigan Republican, told reporters. “Obviously you have to think about all the options potentially. I think people are thinking about it, but I think we want to see if we can get a comprehensive answer at this point.”
Senate Majority Leader Harry Reid today again called on Boehner to schedule a vote on a Senate-passed tax-cut bill. He said every Democrat in the House would support the one-year extension of expiring tax cuts for income of individuals up to $200,000 a year and married couples up to $250,000.
“You have the ability, and you’re the only one who has the ability to put this on the floor for a vote,” Reid, a Nevada Democrat, said on the Senate floor. It would take 26 “reasonable Republicans” in the House to pass the bill, he said.
House Republican leaders are meeting today with a group of small business owners who the Republicans say would face higher taxes under Obama’s proposal.
Members of AARP, a Washington-based group that advocates on issues affecting older Americans, fanned out across Capitol Hill today to lobby lawmakers against any deal that cuts Medicare and Medicaid benefits. In particular, they oppose any effort to raise the Medicare eligibility age and change the way Social Security cost-of-living payments are calculated. Both of these concepts were part of failed talks between Boehner and Obama last year on a deficit-reduction agreement.
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To contact the editor responsible for this story: Jodi Schneider at firstname.lastname@example.orgDec. 5 (Bloomberg) -- U.S. Senator Bob Corker, a Republican from Tennessee, Senator Mark Warner, a Democrat from Virginia, Representative Chris Van Hollen, a Democrat from Maryland, and Tim Pawlenty, chief executive officer of the Financial Services Roundtable and former Minnesota governor, participate in panel discussion about the negotiations to avoid the year-end fiscal cliff of automatic budget cuts and tax increases. Al Hunt moderates the Bloomberg Government event in Washington. Tom Davis, a former representative from Virginia who is now director of federal government affairs at Deloitte Touche LLP, and Bloomberg Government's Don Baptiste also speak. (Source: Bloomberg)