President Obama appears to be taking the lead (imagine that!) after debt negotiations reached an impasse Thursday when House Majority Leader Eric Cantor (R., Va.) and Senate Minority Whip Jon Kyl (R., Ariz.) jumped ship after Democrats insisted on including tax increases as part of a deal to raise the debt ceiling.
White House Press Secretary Jay Carney announced Friday that Obama and Vice President Biden would hold separate meetings with Harry Reid (D., Nev.) and Mitch McConnell (R., Ky.) next Monday “to discuss the status of the negotiations to find common ground on a balanced approach to deficit reduction.”
Carney also confirmed that the president met privately with House Speaker John Boehner (R., Ohio) on Wednesday. Following Cantor’s exit from the talks, Boehner has now been elevated the role of lead GOP negotiator. In a statement released Friday, he firmly reiterated the Republican opposition to tax increases. “The American people voted for a new majority in the House with clear orders to end the spending binge in Washington,” said Boehner. “The American people will not accept an increase in the debt limit that is accompanied by job-crushing tax hikes and fails to dramatically cut and reform government spending.”
A House GOP aide says the caucus is energized by the recent developments and increasingly confident that they hold the upper hand in the negotiations. “Democrats couldn’t raise taxes even when they had a supermajority,” the aide said. “They are barking up the wrong tree.”
Meanwhile, Democrats offered their side of the story as well:
Rep. Chris Van Hollen (D-Md.) on Friday detailed the Democratic demands on taxes that he said led House Majority Leader Eric Cantor (R-Va.) to walk out of deficit talks.
Van Hollen said that the Democrats had floated a plan to change the accelerated depreciation schedule for corporate jets so that they more closely align with commercial jets. He said Democrats had also pushed to end oil-and-gas tax breaks.
On individual taxes, Van Hollen claimed that the Democrat proposal actually would have provided tax relief for more taxpayers. The proposal would have ended tax deductions for those making above $500,000 but would have removed limitations on deductions for those making above around $170,000.
Van Hollen said Democrats had been heartened by a Senate vote last week to end ethanol production tax credits but said those hopes were dashed by Cantor.
“Apparently that did not signal any Republican move from the Republican position of protecting special interest tax breaks,” he said.
Van Hollen indicated there were other tax demands floated in the talks as part of a “menu” of options.
Republicans, however, dispute this account. “While Congressman Van Hollen’s selective memory is amusing, the bottom line is that the proposals pushed by Democrats would increase taxes by hundreds of billions of dollars on individuals, small businesses, and employers at a time when we need to focus on job growth,” said Cantor spokesman Brad Dayspring.
In fact, the disagreement on taxes almost certainly goes beyond the elimination of tax credits (no matter how aflutter the Washington Post gets over Sen. Tom Coburn). Democrats have long been pushing for an all-inclusive “debt cap” as an alternative to the strict spending caps favored by Republicans. Despite the clever terminology, the Democratic option is essentially a gateway to massive automatic tax hikes.
Democrats love to talk about ending subsidies for “big oil.” In fact, they often paint the solution to our debt crisis as a simple choice between “ending Medicare as we know it” (the Ryan plan) and eliminating a few tax credits for oil companies. The only problem is, the Ryan budget actually cuts the deficit by $6 trillion over ten years, whereas getting rid of oil subsidies would yield about $4 billion per year.
They are far less keen to go on record in support of tax hikes that could produce the amount of revenue on a par with the scope of our debt crisis. The same can be said of President Obama, who has been in full 2012 campaign mode for some time now. As Rep. James Clyburn (D., S.C.) argued: “The president has much more to do with his time” than negotiate a solution to an impending fiscal crisis. Cantor and Kyl’s recent defections, however, have forced his hand.
But don’t expect to see a specific proposal from the president. “You don’t need each detail. It is just an excuse,” Sen. Chuck Schumer (D., N.Y.) said on a conference call with reporters. “I think Speaker Boehner ought to sit in a room and negotiate.” He said the president already laid out a “blueprint” in his April 13 speech at George Washington University.