And while House Republicans and Senate Democrats this week advanced budget plans that are at sharp odds over most policies, they agreed that the economy would benefit from wiping out tens of billions of dollars a year in existing tax breaks.
Where they differ, however, is over what to do with the savings — and that dispute could snuff out any hope for the grand bargain Obama pursued in separate meetings with each party in both chambers this week.
Republicans see the tax code as another example of big government, with dozens of tax breaks that favor certain industries and distort the economy. They want to eliminate most of those tax breaks and return all the money generated to taxpayers through lower rates. Nobody would pay higher tax rates, and Republicans believe that a simpler tax code would unleash economic growth.
Democrats see the tax code, however, as riddled with giveaways to the rich and want to scale back deductions and loopholes to raise taxes on the wealthy by $1 trillion. They see those tax breaks as spending programs that subsidize the lives of wealthy Americans at a time of spending cutbacks on programs that help the poor and middle class.
“The starkest difference is that Republicans are pursuing fundamental reform to grow the economy and make the U.S. far more competitive around the world,” said Rep. Kevin Brady (R-Tex.), chairman of the Joint Economic Committee. “While some Democrats view it the same way, many are seeing this as an opportunity for higher tax revenue or higher tax rates.”
But the top Democrat on the House Budget Committee, Chris Van Hollen (Md.), said closing tax breaks and using that revenue to pay down the deficit is critical.
“I think if we want to reduce our deficit in a steady, responsible way, we need to do it with some additional revenue,” he said. “If you don’t have any additional revenue, then you’re reducing the deficit in ways that damage other important national priorities like our investment in education, like our investment in science and research.”
Van Hollen added that without one side ceding ground, no broad agreement to tame federal borrowing or even turn off the sequester will be possibe. “This is absolutely key to getting an agreement,” he said. “This is the key that can help unlock the door.”
Obama concluded three days of visits to Capitol Hill on Thursday, but White House officials downplayed expectations for a deal anytime soon.
“There remains enormous obstacles,” White House press secretary Jay Carney said Thursday. “There remains at least in some corners of the Republican Party an absolutist position that says, ‘No way, no how.’ ”
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