The bipartisan debt-reduction talks broke down last week when Democrats asked Republicans to consider a compromise. According to the Wall Street Journal, participants were eyeing a package that would cut $2.4 trillion over the next decade, and Dems proposed a deal that leaned heavily in the GOP’s favor — $2 trillion in cuts with $400 billion in increased revenue.
It was, in other words, a roughly five-to-one split — for every dollar in increased revenue, Democrats would cut about five dollars in spending. In response, Republicans refused and walked out. The deal, apparently, just wasn’t sweet enough.
Yesterday, President Obama tried to get the talks back on track, holding separate Oval Office meetings with Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.). How’d it go? Let’s just say this phase of the process is off to a slow start.
As President Obama welcomed Senator Harry Reid of Nevada, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader, to the White House for separate budget negotiations, his spokesman, Jay Carney, said Republicans must be willing to consider tax changes, including the elimination of “loopholes” that benefit corporations.
“It’s the only way to get it done if you want to do it right and you want to do it in a way that is fair and balanced and ensures that the economy continues to grow and continues to create jobs,” Mr. Carney told reporters.
But even before Mr. McConnell met with the president, he dug in deeply against proposals for new tax revenue, suggesting that the deal should be struck mainly by cutting spending.
Among his other pronouncements, McConnell argued yesterday, “It’s time for Washington to focus on fixing itself. It’s time Washington take the hit, not the taxpayers.”
It’s an odd argument. Who, exactly, does McConnell think will be affected by his sweeping spending cuts? Yes, the federal government will have fewer resources, but it’s “the taxpayers” who will “take the hit” in the form of fewer services and benefits. The Minority Leader may be confused about how government works, but when people pay federal taxes, the money goes to finance programs that benefit the public. When those services — education, health care, public safety, environmental protections, etc. — are curtailed, it’s not “Washington” that suffers; it’s those who need and rely on the assistance.
In the meantime, White House Press Secretary Jay Carney went into a little more detail about the kind of revenues the president is looking for.
These include a repeal of oil and gas subsidies, an acceleration of the depreciation on private jets, a limit on deductions for the wealthy, and a change in how businesses value their inventory…. “Do we perpetuate a system that allows for subsidies in revenues for oil and gas, for example, or owners of corporate private jets, and then call for cuts in things like food safety or weather services?” Mr. Carney said.
Republicans seem to have an answer to that question: yes, we should perpetuate a system that allows for subsidies in revenues for oil and gas, as well as owners of corporate private jets, and then cut things like food safety and weather services.
As for the exact GOP position on revenue, an administration official said, “There’s genuine confusion about the Republican bottom line.” There’s some evidence that GOP leaders seriously believe the deal shouldn’t bring in so much as a penny in additional revenue. There’s also some evidence that Republicans could accept some new revenue, so long as tax rates remain the same.
Until Republicans figure out which of these lines is their position, the talks probably aren’t going anywhere.