A Mitt Romney win on Nov. 6 would convince U.S. markets that the new Republican president should get “a couple of extra months” to strike a deficit-reduction deal, Florida Senator Marco Rubio said today.
Speaking at a Bloomberg View breakfast in New York, Rubio said the year-end deadline to avert $607 billion in spending cuts and tax increases set to begin Jan. 1 may prove less important if the Republican nominee defeats President Barack Obama.
“If President Obama loses, I think it’s a 50-50 chance that nothing happens because the markets may say, ‘We’ve got a new president coming so, you know, we’ll give you guys a couple of extra months to work this thing out,’” said Rubio, 41. “Markets will give you a couple of months to get President Romney on the ground to work on it.”
If Congress doesn’t act by the end of this year, automatic spending cuts, known as sequestration, will begin to take effect and tax cuts initially enacted in 2001 and 2003 will expire -- a scenario known as the “fiscal cliff.”
“While Jan. 1 technically is the day the fiscal cliff kicks in,” Rubio said, the spending cuts and tax increases will be phased throughout 2013 and beyond.
Should Obama win a second term, his opening negotiating position probably will be to offer to forgo the sequestration cuts in exchange for allowing the 2001 and 2003 tax cuts to expire for top earners, Rubio said. Obama and congressional Democrats have pressed to let those tax cuts expire for individuals with annual incomes more than $200,000 and families with annual incomes greater than $250,000.
“If the president wins, then we’ve got a real scenario on our hands here in terms of avoiding the short-term problem and then -- how do you pivot from that to get to a long-term solution,” Rubio said.
Rubio, who spoke ahead of the second presidential debate at 9 p.m. today at Hofstra University in Hempstead, New York, said he supports a long-term deficit-reduction plan that would simplify the tax code and lower rates. He declined to say which deductions he would support eliminating to cover the cost of rate reductions and defended Romney’s refusal to do the same.
“Their approach is right: You outline the sketches of what your principles are, and then you allow the political process to negotiate what those deductions are,” he said. “There will be a very healthy debate about whether things like the charitable deduction, the health insurance premium, the home-interest deduction should be part of the deal.”
Rubio said he saw value in keeping all three of those deductions. Still, he said there are “tax exemptions on the books that are the product of good lobbying, not the product of good policy.”
The first-term senator said there was “no doubt” that there would be “a full-scale effort” to repeal Obama’s signature 2010 health-care law if Republicans win the White House and the Senate and retain control of the House.
In an interview with Bloomberg Television today, Rubio predicted that Obama will “perform better” in tonight’s town- hall-style debate than he did in the first presidential matchup in Denver on Oct. 3. Democrats and Republicans widely panned Obama’s first debate performance.
“This is a format that he’s good at, he showed that in 2008,” Rubio said. “The problem isn’t going to be his performance. His problem is his record is still the same one.”
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