James Pethokoukis

Politics and policy from inside Washington

Will Boehner pull a ‘Reagan at Reykjavik’ and walk?

July 10, 2011

Will House Speaker John Boehner commit Republicans to raising $1 trillion in taxes as part of President Obama’s last-minute push for as much as a $4 trillion debt reduction deal? Obama and the GOP meet Sunday evening, but things continue to develop quickly:

1) Various news accounts Saturday morning made it sound as if Boehner was flirting with some convoluted deal where some taxes would be raised – including the high-end Bush tax cuts – but lowered later as part of major tax reform, with maybe some of the savings from fewer deduction going to reduce debt.

2) Then on Larry Kudlow’s radio show this afternoon, the WSJ’s Steve Moore said his paper’s reporting was accurate and the GOP were being “tempted” by this offer.

3) Then I got this from a GOP congressional source later in the afternoon:

WH is demanding major, unambiguous tax hikes. To get spending caps & entitlement tweaks, greater economic pain appears to be the WH’s asking price. It is increasingly likely that we aren’t going to see a ‘big’ deal if the WH doesn’t budge. Speaker looks to be holding strong. …

Their fierce insistence on higher taxes is beyond bizarre.

After months of demanding ‘clean’ increase to avert economic calamity (default), WH threatens economic calamity (default) unless they get economic calamity (trillions in tax hikes). No wonder these guys are governing over an economic calamity (9.2% & growth malaise), w an economic calamity on the horizon (debt explosion as mapped out in president’s budget).

[Update 7:39 PM] Appears that the basic framework for future tax reform could not be resolved.

The bipartisan consensus on tax reform (broader base & lower rates) was championed by President’s fiscal commission, and yet now is being rebuked by the President. Lowering top rates that would help make America more competitive was too large a leap for a true class warrior.

That Team Obama wants higher higher taxes is not news.  But the growing GOP allergic reaction is. I think these comments gives good insight into how the GOP perceives the evolving deal. And I hope that second part is true. Tax reform should only be done in the context of lowering marginal tax rates, especially if Democrats aren’t offering entitlement reform that would move things toward a more market-based system such as the one outlined in Rep. Paul Ryan’s bold and visionary Path to Prosperity.

I also doubt whether the spending cuts being offered by the Obamacrats are largely legit and not a manipulation of the CBO baseline by a) cutting defense spending that was never going to happen and b) pushing cuts to Medicare providers that Congress will later undercut. My best guess remains a smaller spending cut deal + no tax increases + a hike in the debt ceiling.

This is Obama in his weekly radio address today:

Both sides are going to have to step outside their comfort zones and make some political sacrifices,” Obama said. “And we agree that we simply cannot afford to default on our national obligations for the first time in our history.

Obama says he wants a big deal, maybe because he needs an economic win to counter the faltering economic recovery and deprive the GOP of the “big spender” line of attack in 2012. Maybe he is finally listening to Tim Geithner and Jack Lew.  It all reminds me of President Ronald Reagan and Soviet leader Mikhail Gorbachev at the 1986 arms control summit in Reykjavik, Iceland. Reagan walked away from a deal that would have eliminated nuclear ICBM’s in a decade because it would hobbled research into the Strategic Defense Initiative. Reagan was right to walk away then, and Boehner would be right to do the same now.

 

Comments

I really think somebody needs to order some mental competency exams for all these guys…

Posted by GAPETERSON1958 | Report as abusive
 

I’m trying to understand this, but walking away when someone is offering for a 50/50 deal makes you look “bigger”? HOW? This is how compromises are made. They’re COMPROMISES. You can’t expect one side to get everything and another get nothing like Boehner expects.

Posted by calchala | Report as abusive
 

Why would Republicans accept a 50/50 compromise when they hold all the cards? The Gimmecrats have two options: 1) accept the proposed spending cuts with no new taxes, or 2) accept no increase in the debt ceiling. There is plenty of revenue to continue making our debt payments, but cuts will have to be made elsewhere if the debt ceiling is not raised.

This is not rocket surgery, folks. The choices are easy to understand. Perhaps what really has Gimmecrats confused is they cannot comprehend the concept of ‘running out of other people’s money’.

Posted by Max17 | Report as abusive
 

Tweet @SpeakerBoehner and @GOPLeader your message:

Let’s start by rolling back the failed “Stimulus” package, which is now built into the baseline budget.

That should be non-negotiable. Easy-to-understand. Supportable by any American worried about the future deficit.

Posted by dougross | Report as abusive
 

It’s simple now that Boehner has seen the light. The House Republicans should vote to cut the $2T outlined in the Biden talks (with no tax increases) and raise the debt ceiling. Then, if the Senate votes it down or the Pres vetoes, a government shutdown is on them – not the Repubs.

Posted by frankfromny | Report as abusive
 

If the Democrats call the republiCons bluff then the mob is coming after you first.

Posted by birdonawire | Report as abusive
 

calchala wrote >> “I’m trying to understand this, but walking away when someone is offering for a 50/50 deal makes you look ‘bigger’? HOW? This is how compromises are made. They’re COMPROMISES. You can’t expect one side to get everything and another get nothing like Boehner expects.”

It seems to me that’s exactly what the President did when pushing his health care takeover. He even said such conciliatory things like “I won. Get over it.” Well, the Republicans won big last November. The President is now the one who needs to “get over it” and get down to the real business of cutting spending, especially as overspending — not too little revenue — is our problem.

Posted by NNT234 | Report as abusive
 

We the tax payer are FINISHED subsidizing the HUGE voter base of the Democrat party! It’s that mutha-effin’ simple!

Posted by Cartman | Report as abusive
 

We the tax payer are finished subsidizing the lives of the base of the Democrat party.

Posted by Cartman | Report as abusive
 

The republicans should agree to tax hikes, but hikes that mainly hit democrats. For starters eliminate the tax deductibility of local income taxes, the deductibility of taxes paid to localities that are sanctuary cities or have rent control. Tax the income and capital gains of non religious non profits and levy a gross receipt tax on their funds raised. Force the repeal of the Davis-Bacon Act and a national right to work act as part of the deal along with tort reform. There are some many things they can squeeze the democrats for. I fail to see why they don’t.

Posted by cubanbob | Report as abusive
 

Why would Republicans walk away from a deal offered by Obama that involves raising tax collections today, with a promise to go back and “re-examine” and possibly lower tax rates later – in exchange for some entitlement cuts?

Because no one trusts BO at all anymore. Not one iota.

His own minions at EPA are enacting his executive-order version of cap-n-trade, his minions at DOJ are working on his plan to supply arms to Mexican gangsters so that he can impose gun control by fiat, his minions at NLRB are enacting the most inane forms of complete federal takeover of “business judgment” roles in the name of protecting labor, and, when questioned about these things, he professes ignorance and claims not to control his own appointees.

He lies. If he can further his own twisted goals for this country by lying, he lies. Sometimes I think he lies just because he’s fallen out of the habit of telling the truth, and “lie to them” has become his default setting.

Remember all of his campaign promises? Transparency? Anti-corruption? Work for the country, not his cronies? All lies. Talk to the people who worked for Hilary Clinton: they’ll tell you that he beat her for the nomination through dishonesty and bullying. Look at his campaign financing: he turned off AVS – the security features in his credit-card system – that would have made it possible to tell from where donations were coming, and then took in tons of money from fake names, and from foreign sources. Look at his repeated claims to be “moderate”: it was only once he got elected that his true far-left leanings became transparent.

So, how could the R’s walk away from such a great deal? Because it was Baraq O making the promises.

Posted by bobbybobby | Report as abusive
 

A reply to calchala: There is no 50/50 deal here. The American taxpayers have been funding the Democrats’ spending frenzy for for 46 plus years. Didn’t you notice the last debt ceiling outcome was a joke on the taxpayers? Where were you? The Democrats promised cuts in spending but the cuts ended up to be pocket-change. The Democrats should face up to the destruction they have wrought over these last decades and admit there must be a way that actually grows the economy. That way is a small government and a very large private sector. Governments don’t create jobs. They just regulate the theft from one group to another group. When was the last (or first) time a government worker came up with a cure for a disease? Or, started a business that employed people? Or, discovered a new way to produce something tangible that was useful to the society? The answer is NEVER because all they do is enforce dictates from the President and his thugs. What compromise? Time for compromise is long gone. It’s time for the private sector taxpayers to demand a smaller, less costly government that lowers taxes and encourages businesses to start, grow and expand. Not only should the government do these things they should also stay home from their jobs for 6 months and leave the country to the private sector to fix. Paying so many unnecessary bureaucrats so much money to shuffle papers is a national disgrace. It’s totally like opening the window and throwing taxpayer money away. Stop with the regulations and let the markets do the work of producing jobs and a better lifestyle for all.

Posted by Ziporary | Report as abusive
 

To CubanBob,

Also ObamaCare waivers should only be allowed for organizations and individuals that can prove they opposed the disaster before it passed. Then the premiums need to be set to pay all of it. Thus liberals will get what they like (high pricing) and conservatives will get freedom.

Posted by LuKangSung | Report as abusive
 

People – 2012 is coming – vote Obama outta there – incredible. http://www.ciaoobama.com

Posted by Ciaoobama | Report as abusive
 

Wow. Peanuts when we need boulders.

On the issue of taxes … much money goes uncollected each year. IRS estimates at least a third of a trillion dollars go uncollected under current tax law; uncollected taxes on cash-paid services, uncollected taxes on tips, double deductions by small business owners. That alone would cover much of the $4 trillion over 10 yr. target, were the IRS equipped to make it collectable. Further, we have heard of the poster-child cases of GE and Forest Labs paying zero using legal shell-based loopholes. Today, Reuters reported that Fox / News Corp. paid not just zero taxes, but was actually paid back $4 billion in refunds. While I pay north of 40% per year in combined federal taxes, I am sure Mr. Rupert Murdoch pays 18% or less per year on his much more sizable income. Cutting benefits for disabled vets and tossing grandmothers off Social Security is not an answer. Eliminating regulatory inspectors is not an answer; time and again, industry has shown a contempt for consumer safety e.g. Toyota. Enough is enough with revenue cutting … collect taxes fairly on those enjoying the benefits of a United States, as imperfect as it may be.

This is not only about the me’s; it’s about US.

Posted by SanPa | Report as abusive
 

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