Bloomberg News

Sessions Says Republicans Open to Tax-Entitlements Trade

December 15, 2012

The incoming House Rules Committee chairman says congressional Republicans would be willing to accept an increase in tax rates for top earners if Democrats make significant reductions in entitlement programs such as Social Security and Medicare.

“If it’s a good deal, yes,” Representative Pete Sessions of Texas said on Bloomberg Television’s “Political Capital With Al Hunt,” when asked whether he’d accept a trade-off involving tax rates. “If it does something long term that betters the circumstances.”

Sessions is a close ally of House Speaker John Boehner, the Ohio Republican who named him as chairman of the committee that determines which bills reach the House floor. He said Boehner was committed to reaching a deal with President Barack Obama to avoid the more than $600 billion in tax increases and spending cuts scheduled to take effect beginning next month.

“It takes both sides,” Sessions said in the interview airing this weekend. “The president would have to do equally as we do.”

Boehner returned to yesterday, following a Dec. 13 meeting with Obama that ended with no public indication that the two were moving closer to a deal.

Clinton Rates

Obama has called for tax rates on household incomes exceeding $250,000 a year to revert as scheduled next year to those during the administration of President Bill Clinton, who left office in January 2001 with a budget surplus. The top tax rate would rise to 39.6 percent from 35 percent now.

Senate Republicans were discussing a plan to have the House pass two bills, one extending the expiring tax cuts for everyone and one for all but high earners. The Democratic-controlled Senate would pass the second measure and send it to Obama for his signature, while congressional Republicans could go on record in support of extending all of the tax cuts.

Congressional Republicans, while calling for cuts in entitlement programs, have yet to propose the specific reductions. They have agreed to $800 billion in revenue by curbing unspecified tax breaks while insisting on an extension of all of the Bush-era tax cuts scheduled to expire next month.

Among the options discussed on the entitlement issue are raising the eligibility age for Medicare, the health-care program for the elderly, to 67 from 65, and using a less- generous measure of inflation to curb automatic increases in Social Security payments to beneficiaries.

Democrats Needed

Representative Steve LaTourette, an Ohio Republican, has said Boehner could gather the 218 House votes needed to send a tax increase to the Democratic-majority Senate if about 120 Democrats “buy in” on changes to the Medicare eligibility age or the Social Security cost-of-living formula.

Earlier this month, Oklahoma Representative Tom Cole was the first high-profile Republican to say his party should lock in the 2001 and 2003 income tax cuts for 98 percent of Americans by the end of the year and allow them to expire for the top 2 percent of earners. Some other Republicans have said they agree.

Sessions, the outgoing chairman of the National Republican Congressional Committee, said the party’s lawmakers aren’t worried about being challenged in primaries if they raise taxes under a deal that cuts spending, reduces the deficit and helps the economy.

Time Constraints

He said there wouldn’t be enough time to enact legislation by the end of the year; instead, both sides could agree to a specific outline and enact it next year.

“We’re not going to do something in the dark, late at night where no one knows what the practical effect and outcome is,” Sessions said. “If we do that, we do get primaried. We can come to a specific agreement.”

Sessions said that there wouldn’t be enough time to also include a spending bill for the remainder of the fiscal year and an increase in the debt ceiling in the current talks. He said Republicans were willing to discuss those issues later.

“The president needs to know that we’re willing to negotiate,” he said.

Surveys show public support for Obama’s call for allowing the tax cuts to expire for top earners, a centerpiece of his successful re-election campaign. Almost half of Republicans said Obama had an election mandate to raise rates on the rich, according to a Bloomberg National Poll conducted Dec. 7-10.

Sessions turned aside those findings. “The debate’s still alive and well in America,” he said.

To contact the reporters on this story: Jonathan Salant in Washington at jsalant@bloomberg.net; Heidi Przybyla in Washington at h@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.


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