McConnell Takes Taxes Off the Table

As legislators ready for fight on debt ceiling, Senate minority leader says focus should be on spending cuts.

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,” 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 today 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.

“Mitch McConnell is drawing that line in the sand; it’s 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 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 today 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. But if it works for us, if it grows our economy, if it’s something that justifies its existence, it should be there.”

After partisan gridlock last year 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.


Paying the Bill

“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 weekly radio address, which aired yesterday. “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.”

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

“Spending cuts must be balanced with more reforms to our tax code,” Obama said in his weekly radio and Internet address. “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.”

The message echoed a call that Obama made to campaign supporters on Jan. 2 favoring a “balanced approach” to deficit reduction.

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

“A lot of what you just heard Senator McConnell say was the same thing that Republicans have been saying for the last few years,” Castro said on ABC. “It’s as if the election never happened and we never learned any lessons from it.”

Lawmakers should “put everything on the table, start working together, that’s what you do in America in every small town and every business in America,” Senator Heidi Heitkamp, a Democrat from North Dakota, said on the ABC program. “You don’t rule out anything until you’ve actually had a dialogue.”

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. “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 Ways and Means Chairman Dave Camp, in the Republicans’ weekly address yesterday, said the U.S. government “spends too much and wastes too much,” and “the spending problem is getting worse, not better.” Camp also advocated changes to the tax code.

House Speaker John Boehner has suggested matching every dollar that goes into raising the debt limit with spending cuts. Pelosi said today 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.”


Bloomberg News

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