James Pethokoukis

Politics and policy from inside Washington

Obama vs. Boehner: Tax battle again plagues debt ceiling tax

July 23, 2011

First the basics from Reuters:

Here is what’s happening on Friday in negotiations to raise the U.S. government’s $14.3 trillion debt limit by Aug. 2 and avoid a credit default:

* U.S. House Speaker John Boehner walks away from talks with President Barack Obama on a deficit reduction deal that was to clear the way for an increase in the debt limit. Boehner says Obama wanted to raise taxes. Boehner says he will now begin talks with U.S. Senate leaders.

* Obama says it “hard to understand” why Boehner would walk away from what he called an “extraordinarily fair” deal. Obama says deal would have cut $1 trillion in discretionary spending and $650 billion from Medicare, Medicaid and other entitlements. Deal would have sought $1.2 trillion in revenues, which could have been achieved with raising income tax rates.

Roll Call is all over this, too. And here is the take of congressional GOP source to me:

We never had agreement on a revenue number. But the WH did demand more revenue post gang of 6 – a lot more revenue. Entitlements [changes included] Medicare raising age, significant savings, combining Medicare parts A and B, means testing. Also chain cpi on social security and additional savings. GOP proposed over 200 billion in medicaid savings, WH up to 120. But n agreement on$800 billion. But there would have been tax reform and 3 flat rates – broadened base, lower rates. WH wanted higher rates post gang.

Here is how I see it:  Boehner says they had an agreement on $800 billion in revenue, but then Obama asked for $400 billion post Gang of Six report. The “goal posts” were moved. That extra $400 billion would come from higher tax rates. That is an absolute, no-go, red-zone issue for Republicans. Where would the original $800 billion have come from? First, extra revenue from more economic growth generated by tax reform efficiencies. Second, and this is a pretty good guess based on what Boehner said, better tax enforcement. Here is Boehner describing where the money came from ” … and a tax system that was more efficient in collecting the taxes that were due the federal government>”

That is a classic item on the liberal agenda, and I can easily see Obama pushing it. Here is the Center for American Progress describing it:

An estimated $400 billion to 500 billion in taxes go uncollected every year in the United States because of tax evasion and noncompliance.  … This yawning “tax gap” increases the deficit and undermines the faith of honest taxpayers who don’t cut corners. Every additional $1 invested in tax enforcement and compliance can shrink the deficit by at least $3. President Barack Obama’s proposal to invest an additional $13 billion in IRS enforcement and compliance activities over the next decade will generate more than three times that amount in additional revenues—$42 billion, according to official estimates. The funding will allow the IRS to contact potentially noncompliant taxpayers that “it currently identifies but cannot contact given resource constraints” and strengthen pre-refund compliance checks, according to the Government Accountability Office. Better enforcement leads to greater compliance: After the IRS in recent years began targeting people using offshore bank accounts to evade taxes, about 19,000 taxpayers entered a voluntary compliance program and paid billions in back taxes and penalties.

My best guess is still $1.5 trillion in cuts  (no tax increases) plus a debt hike through 2012.

UPDATE: Here is bit more from another GOP aide:

Despite what WH briefers may be saying, any new revenue in the framework would NOT have been generated by letting the current tax rates expire. That is simply false. Under the framework discussed, a CEILING was agreed upon that could generate $800 billion in new revenue over ten years. This would be done through comprehensive tax reform that would clear out deductions, credits, and loopholes in the system – and spur economic growth. After the gang of six plan came out, the White House moved the goal posts and insisted on $400 billion more in higher taxes – a 50% increase in revenue – and wanted that to be the FLOOR instead of the ceiling. The President acknowledged this in his remarks tonight. “Letting tax cuts expire” was never part of the tax reform agreed to.

Comments

What the president offered was MORE THAN FAIR.
Obama offered 1.65 Trillion in cuts that would offend his base of poor and middle class.
Obama wants Boehner to offer up 1.6 Trillion in revenues from his base of 2% richest people and corporations.

Boehner is GETTING “MORE” cuts from the poor people than he is willing to give from his rich base!

And…it was a big part of Boehner’s base (bankers and wall street corporations) who created this financial mess.
Then Americans had to bail them out to the tune of 700-800 Billion.
NOW – Boehner and his rich buddies want another $700 billion from social Security and Medicare.

Wall Street and corporations are CASH RICH right now – and they want MORE off the backs of the middle class and poor.
Who is going to buy Corporation’s goods, if the middle class become poor and seniors die off quickly from living on less than $1,000 month and reduced health benefits?

To me, it is the corporate Republicans who WANT the economy to NOT RECOVER, so they can get into the president’s chair in 2012. Nasty.

The corporations have a ton of money to spread propoganda before the 2012 elections and support radical Tea Party candidates. (Thank you Supreme Court for allowing ANY international corporation to control US elections)
What is fair?
1.65 billion in cuts from Obama & 1.6 in revenue from Boehner. How is that not fair???

Posted by ShoppingIdiot | Report as abusive
 

If I understand this properly, Bush tax cuts were extended to promote growth. Surely the time has come to pull that plug?

Examples of successful ways out of this type of mess are abundant: Canada, UK, Sweden(?). They all involve tax increases. The US isn’t even doing that. And what are the effect of all the loopholes? Repat profits at 5% seems fine, but how many on Main St pay 5%?

At some point the big end of town will need to realise that the recovery must be general: the small end is where their wealth comes from. Companies are hoarding cash, big public money was spent on propping up the financial system, as if that is the heart of your economy. Now, surprise! the cupboard is bare.

The GOP created this mess & got the boot because of it. I doubt voters will be so stupid as to blame the Democrats for this mess. If they are, god help you all. more & more, it looks like the GOP are in hock to a bunch of loan sharks & would rather cripple the country than lose their kneecaps. Your ‘loony Right’ is a luxury you can’t afford.

Supposedly, when the GOP held up supply during Carter Admin it raised cash rates 0.6%, forever. WHEN the US gets downgraded that will happen again.

It reminds me of those (American) stories of 500 lb guys, can’t even get out of bed. They phone out for 12 pizzas. When one gets stuck in their gut they have to be airlifted to hospital. That’s you.

Funny that, the GOP are happy to lie when it means starting a war, costing you trillions. Yet they feel they can’t break their pledge to your Tea Party idiots to not raise taxes.

There is one positive. It’s kind of cool to be alive & witnessing in detail the events that led to the demise of the US empire. Frankly, I don’t think you can get it done. You lie to yourselves too much, you treat your population like slaves, your rich/poor ratio is too extreme. It’s like watching the clumsy cartoon giant tripping over it’s own feet, off the cloud, making a huge hole in the ground below. Or Wile E Coyote running off the cliff.

Lenin once said the last capitalist will be hung with a rope bought from the 2nd last capitalist. I wish I was being melodramatic but the numbers don’t lie. Russia isn’t buying US debt anymore, frankly I’m amazed that that China still is.

Posted by gryphon | Report as abusive
 

Did you know that right now, the IRS is in a comment period on a new regulation revision. (REV.Proc. 2000-43)
The IRS, bending to the administration wishes, wants
the IRS commissioner, and deputy commissioner to be
able to discuss details of individual cases with the
currently INDEPENDENT Office of Appeals
without the knowledge of the taxpayer (or his
representative). The basis of this sought after change
in the existing ex parte communication rule is
said to be only supervisory in nature. Bull.
A supervisor needs to talk an independent body behind
close doors…maybe even lean on them a little?

Well, I think so. Here is another great
example of the liberal socialistic/communistic-leaning
mentality currently in the WH that wishes to bend
and control tax cases so that due process isn’t
going to happen no matter what…only what is beneficial to the governing authority! If a tax case goes
before the Appeals….the person is guilty on arrival,
why bother?

In a democracy, independent MEANS independent!

We just saw the CFPB’s (Consumer Financial Protection
Bureau) birth this last week wishing to be the first
agency (in a democratic country!) that doesn’t need
to answer to Congress, and therefore the people.
The CFPB is the silencing of the American majority!

In this debt ceiling debate, there is more at play and it is Boehner’s wish to stop the trampling of the democratic process.

I’m from Wisconsin and in this state, we’ve witnessed
the democratic process going-to-the-dogs under the
stresses of union/minority fiscal and political power,
mainly the democratic party.
A republican governor stepped in and fought
like everything to get the movement turned back
to sane, equal, and forthright.
Yet, the Obama administration and Chicago-
style politics forced it’s way into our state struggle against (yes) communistic-like leanings.
Well, the tables are turned by law now. Democracy
is once again working properly, but the communistic-like
leanings are STILL in Wisconsin trying to recall
themselves back into power. And much, much
of that funding is being generated at the bidding
of Obama and gang.

In this current debate on Washington Hill,
Congress MUST show whose boss and that’s the whole of it. Boehner has to win here and stop the
momentum of this whole country turning eventually away from democracy.

Posted by limapie | Report as abusive
 

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