More Deficit Reduction Talks and Proposals OutlinedMay 10, 2011
Taxes and deficit-reduction continue to dominate discussions in Washington, D.C. as lawmakers work to craft a budget for FY 2012 and offer varrying deficit proposals, while also hoping to craft some kind of compromise to address the debt ceiling. The goal of curbing federal deficits, which is vital for America’s long-term economic growth, continues to be a priority for Democrats, Republicans, Representatives, Senators and the administration, but how to do that is proving politically difficult.
In a speech at the Economic Club of New York on Monday night, House Speaker John Boehner (R-Ohio) made it clear that any votes to increase the nation’s $14.3 trillion debt limit would have to be accompanied by spending cuts in the same amount by which the ceiling is raised.
With members of Congress discussing an increase as large as $1 trillion or $2 trillion, which would see the government through the next two years, the deal Boehner proposes would entail massive, multi-year cuts, including to entitlement programs—or a series of smaller, short-term debt-limit increases linked to more manageable spending cuts.
Boehner also expressed optimism that corporate tax reform, a high priority among House Republicans and an area that the White House has expressed some willingness to work on, will be taken up within the next two years. He went on to say, that Republicans are not going to use tax reform as a way of increasing taxes on the American people or on American enterprises.
He said he did not think corporate tax reform had to be considered with individual tax reform, but the need to deal with “pass-through entities,” like partnerships or limited liability companies–which represent 83 percent of all small businesses, according to NSBA data–will push Congress to also deal with overhauling individual taxes in a way “closely associated” with corporate reform.
Meanwhile, on Tuesday, Senate Budget Committee Chairman Kent Conrad (D-N.D.) presented a budget proposal to Senate Democrats that calls for an even balance—50 percent to 50 percent—of spending cuts and tax increases to reduce the deficit. That is a more even ratio between spending cuts and tax increases than what President Obama’s Deficit Commission recommended last fall. It suggested reducing deficits through two-thirds spending cuts and one-third tax increases. In a speech last month, Obama suggested a 3-1 ratio between spending cuts and tax increases in laying out his vision for reducing deficits.
Conrad has moved his budget proposal to the left in order to gain the support of Sen. Bernie Sanders (I-Vt.), an outspoken progressive on the budget committee. Sanders has called for “shared sacrifice” in reducing the deficit and wants to increase taxes on families earning over a million dollars a year.
Sanders criticized Conrad’s first budget proposal, which the chairman shared with the Democratic conference last week, for not requiring more sacrifice from corporations and wealthy taxpayers to balance the budget.
Conrad has scrambled to win Sanders’s support over the past week. Without his vote, Conrad can’t pass a budget out of the Budget Committee, which is narrowly split between 12 Democrats and 11 Republicans. Republicans vow to strongly oppose any deficit-reduction proposals that increase taxes. Conrad said he was doubtful that his panel would mark up the fiscal 2012 budget resolution this week, but wouldn’t rule it out.
Finally, Vice President Joe Biden convened a second meeting of a group of legislators to talk about deficit reduction on Tuesday. After last Thursday’s meeting, the vice president projected optimism about the possibility of a deal, though significant differences between the two parties remain.
In a sign that Obama is eager to move things along more swiftly, the White House announced that Obama is having his own meetings about deficit reduction with Senate Democrats on Wednesday, and another with Senate Republicans on Thursday.