The move comes weeks after President Obama responded to Republican demands to cut expensive federal retirement benefits by offering to shrink Social Security cost-of-living adjustments and raise Medicare premiums. The proposals, included in the president’s budget request, outraged seniors, and some Republicans fear that embracing them would be political suicide.
There is no such ambivalence, however, about simplifying the tax code and lowering the top rate, which jumped from 35 percent to 39.6 percent as part of a year-end budget deal that still rankles Republicans.
“The conference will unite around tax reform,” said House Majority Whip Kevin McCarthy (R-Calif.), who hosted the first “listening session” on the issue Thursday in his first-floor Capitol office. “The window is now.”
House Ways and Means Committee Chairman Dave Camp (R-Mich.) led the session, offering polling and focus-group data showing that voters are hungry for simpler, fairer tax laws. Camp has started drafting legislation that would wipe out the current welter of exemptions and deductions and replace them with sharply lower rates, an approach championed by Erskine Bowles and Alan Simpson, co-chairmen of Obama’s fiscal commission.
“We’re not going to take the current code and see what comes out. We’re going to take a blank piece of paper and see what goes back in,” said Camp, who advocates a streamlined code with just two brackets and a top rate of 25 percent.
The House strategy also holds some appeal in the Senate, where key Republicans say it may offer a more palatable alternative to negotiating a budget deal directly with Obama. After two dinners with the president and a meeting Thursday with senior administration officials, Senate Republicans are under pressure from the White House to produce their own debt-reduction plan to counter Obama’s proposal to reduce borrowing by $1.8 trillion over the next decade through higher taxes as well as cuts to retirement programs.
Senate Minority Leader Mitch McConnell (R-Ky.) is staying out of the talks, and it’s not clear who would make such an offer on the GOP’s behalf. Republicans involved in the process say they are reluctant to form another ad hoc “gang” and hope to channel negotiations through the Senate Finance Committee, which has broad jurisdiction over taxes, Social Security and Medicare. Plus, retiring Finance Committee Chairman Max Baucus (D-Mont.) has a track record of working with Republicans and is eager to strike a deal.