Bloomberg News

McConnell Takes Taxes Off the Table in Debt Limit Negotiations

January 07, 2013

Senate Minority Leader Mitch McConnell

“The tax issue is finished, over, completed,” McConnell said on ABC’s “This Week” program. “Now the question is what are we going to do about the biggest problem confronting our country and our future and that’s our spending addiction.” Photographer: Ken Cedeno/Bloomberg

Senate Minority Leader Mitch McConnell said further tax changes are off the table as lawmakers and the president gear up for a fight next month over raising the U.S. government’s debt limit.

“The tax issue is finished, over, completed,” Kentucky Republican McConnell said on ABC’s “This Week” program. “Now the question is what are we going to do about the biggest problem confronting our country and our future and that’s our spending addiction.”

Less than a week ago, President Barack Obama and lawmakers reached a compromise that averted the package of spending cuts and tax increases known as the fiscal cliff.

Republicans attempted yesterday to shift the debate away from taxes to focus on cutting government spending. Democrats countered that everything including taxes has to be a part of the negotiations.

“If Mitch McConnell is going to draw that line in the sand; it’s going to be a recipe for more gridlock,” Representative Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee, said on “Fox News Sunday.”

The U.S. reached its $16.4 trillion legal debt limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.

Markets Rally

Markets rallied last week following passage of a law raising income-tax rates to 39.6 percent for couples with annual income above $450,000 while extending tax cuts for lower incomes and delaying automatic spending cuts until March 1.

House Minority Leader Nancy Pelosi, a Democrat from California, said yesterday that taxes are “not off the table.”

“Put it all on the table and see what is working,” Pelosi said on CBS’ “Face the Nation” program. “I’m fairly agnostic about what it could be now that we have injected some fairness into the process.”

After partisan gridlock brought the government to the brink of default in August 2011, the stock market fell and Standard & Poor’s cut the nation’s credit rating to AA+ from AAA. House Speaker John Boehner, an Ohio Republican, withdrew from negotiations on July 22, 2011, and the S&P 500 Index fell more than 16 percent in the next 11 trading days.

Debt Ceiling

Illinois Senator Dick Durbin, the second-ranking Democrat, said on CNN’s “State of the Union” that “the debt ceiling is something that we should put behind us in a hurry.”

Obama shouldn’t have to face “one of these last-minute showdowns over the debt ceiling,” Durbin said, citing former Republican House Speaker Newt Gingrich, who said on MSNBC last week that the debt ceiling issue was “a dead loser” for Republicans.

“One thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up,” Obama said in his weekend radio address. “The last time Congress threatened this course of action, our entire economy suffered for it.”

McConnell said the focus should now turn to cutting spending.

“I wish the president would lead us in this discussion rather than putting himself in a situation of having to be dragged kicking and screaming to the table to discuss the single biggest issue confronting our future,” McConnell said on NBC’s “Meet the Press.”

Obama said in his radio address that any reductions in spending should come alongside higher levies on rich Americans and companies by changes to the tax code.

Higher Taxes

“Spending cuts must be balanced with more reforms to our tax code,” Obama said. “The wealthiest individuals and the biggest corporations shouldn’t be able to take advantage of loopholes and deductions that aren’t available to most Americans.”

Representative Joaquin Castro, a Democrat from Texas, said raising the debt limit “can’t be about ultimatums.”

“It’s as if the election never happened and we never learned any lessons from it,” Castro said on ABC.

McConnell said on NBC that American voters chose a divided government.

“We have a Democratic president, a Democratic Senate and a Republican house, McConnell said. “They expected us to figure out some way to make progress for the country.”

McConnell said Republicans should use this opportunity to discuss entitlement programs with Obama and the Democrats. He called for raising the eligibility age for Medicare and means testing for high income people.

Buffett’s Medicare

“Warren Buffett’s always complaining about not paying enough taxes,” McConnell said on NBC, referring to the 82-year- old billionaire chairman and chief executive officer of Berkshire Hathaway Inc. (A:US) “What I’m complaining about is we’re paying for his Medicare. We ought not to be providing these kinds of benefits for millionaires and billionaires.”

Representative Tom Cotton, a Republican from Arkansas, said on ABC that “we have an opportunity over the next 60 to 90 days in the new Congress to face the most consequential questions that we will face in the next two years, and that’s to get our economy growing by reforming our tax code, cutting spending.”

House Speaker John Boehner has suggested matching every dollar that goes into raising the debt limit with spending cuts. Pelosi said yesterday those two things shouldn’t be related.

“Is the taxpayer getting his or her dollars’ worth for that spending?” Pelosi said. “That is a judgment we have to make as we make cuts to reduce spending, but having nothing to do with whether the full faith and credit of the United States of America should be placed in jeopardy.”

To contact the reporter on this story: Cheyenne Hopkins in Washington at chopkins19@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


Later, Baby
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • A
    (Agilent Technologies Inc)
    • $54.65 USD
    • 0.97
    • 1.77%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus