Boehner declares tax hikes ‘off the table,’ drawing White House rebuke


House Speaker John A. Boehner (R-Ohio) addresses the Economic Club of New York on May 9, 2011 in New York City. (Spencer Platt/GETTY IMAGES)
May 10, 2011

House Speaker John A. Boehner (R-Ohio) declared Tuesday that raising taxes is “off the table” in negotiations on deficit reduction, prompting a White House complaint that such “maximalist positions” do not lead to compromise.

The White House also denounced Boehner’s demand a day earlier for more than $2 trillion in spending cuts in exchange for Republican agreement to raise the U.S. debt limit. Press secretary Jay Carney likened the demand to a hostage-taking, telling reporters, “It is folly to hold hostage the vote to raise the debt ceiling . . . to any other piece of legislation.” He said increasing the debt limit is intended to prevent the United States “from defaulting on its obligations.”

In an interview on NBC’s “Today” show ahead of a new round of deficit-reduction talks hosted by Vice President Biden, Boehner appeared to rule out any compromise with Democrats on allowing the Bush-era tax cuts for wealthy Americans to expire or ending tax breaks worth billions of dollars to large oil companies making record profits. Republicans define both steps as tax increases.

“What some are suggesting is we take the money from people who would invest in our economy and create jobs and give it to the government,” Boehner said. “The fact is you can’t tax the people we expect to invest in the economy and create jobs. Washington doesn’t have a revenue problem. Washington has a spending problem.”

Asked whether “raising taxes is a nonstarter,” Boehner replied: “It’s off the table. Everything else is on the table.”

That brought a rebuke from Carney, who complained that the GOP’s “position that eliminating the Medicare program as we know it remains on the table, but dealing with tax expenditures is off the table.” Speaking to reporters accompanying President Obama on a trip to Texas aboard Air Force One, Carney added: “Maximalist positions do not produce compromise.”

Carney said linking an upcoming vote on the debt ceiling to massive spending cuts “remains extremely unwise in our view,” and he cited Boehner’s own words on the potentially catastrophic results of failing to raise the amount the federal government is allowed to borrow. This would mean “financial disaster not only for our country but for the worldwide economy,” he quoted Boehner as saying Jan. 30. “You can’t create jobs if you default on the federal debt.” Carney said that “we couldn’t agree more.”

The skirmishing came a day after Boehner defined the GOP’s terms for raising the legal limit on government borrowing, demanding that Obama reduce spending by more than $2 trillion in exchange for an increase big enough to cover the nation’s bills through the end of next year.

Delivering a sermon on fiscal austerity to a Wall Street crowd clamoring for compromise on the debt limit, Boehner firmly rejected any effort to raise taxes. He also called on Democrats to engage in “honest conversations about how best to preserve Medicare,” signaling that House Republicans remain committed to restructuring at least some portions of the program.

And for the first time, he signaled that Republicans would come to the negotiating table with the expectation that the White House and Senate Democrats be prepared to discuss major reductions in federal spending — and enact them immediately. That was a sharp shift from Republicans who just last week talked of finding “commonality” on less-ambitious measures.

“Without significant spending cuts and changes in the way we spend the American people’s money, there will be no increase in the debt limit. And the cuts should be greater than the accompanying increase in the debt limit that the president is given,” Boehner said in an address to the Economic Club of New York at a hotel in Midtown Manhattan. “We’re not talking about billions here. We should be talking about cuts in trillions if we’re serious about addressing America’s fiscal problems.”

The extent of Boehner’s demands was unclear. Aides declined to say over what period the cuts would have to take effect, saying only that they could be achieved on a time frame longer than the life of the debt-limit increase.

Boehner’s terms referred specifically to discussions about raising the debt limit. His speech suggests that Republicans will try to extract as much as they can from that debate, before the parties move on to broader discussions about the nation’s long-term fiscal problems. Democrats had indicated a desire to limit the scope of debt-ceiling talks.

The address preceded a meeting Tuesday afternoon of lawmakers from both parties, Biden and other White House officials. The second such gathering of the bipartisan group is part of an effort to work out a plan aimed at smoothing passage of a debt-limit increase. The meeting at Blair House begins a week-long campaign by the Obama administration to engage lawmakers on the issue. Obama plans to bring all 100 senators to the White House — Democrats on Wednesday, Republicans on Thursday — to begin laying the groundwork for compromise.

The national debt is set to reach its limit of $14.3 trillion within the next week, although Treasury Secretary Timothy F. Geithner has told lawmakers that he can keep paying the bills through Aug. 2. The Treasury Department estimates that it will need an additional $2 trillion in borrowing authority to get through the end of next year. Even the relatively austere budget blueprint the House approved last month would require $1.9 trillion in fresh borrowing through September 2012.

Republicans could fashion a debt-limit increase that covers a shorter period, GOP aides said, in which case the cuts needed to pass it would be lower. But such a strategy would require multiple votes to raise the limit before the 2012 election, something many lawmakers in both parties want to avoid.

Geithner and other market experts say that not raising the debt limit would force the United States to default on its obligations, triggering a cascade of negative economic consequences. “Default is the financial equivalent of suicide,” Roger Altman, a private-equity investor who served in Bill Clinton’s Treasury Department, said Monday in a conference call with reporters.

But in his speech Monday evening, Boehner fired back that not significantly restraining borrowing would have effects just as profound.

“It’s true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process,” he said, noting that many in the room were “uneasy” about the potential showdown on the debt ceiling.

Democrats immediately rejected Boehner’s approach as reckless. Sen. Charles E. Schumer (N.Y.) said Monday that the speaker is “playing with fire” by not telling the captains of Wall Street that he would definitely approve an increase in the debt ceiling, no matter how far along the fiscal negotiations are. Schumer mocked Boehner’s long-running call for an “adult conversation” with the American public about the nation’s debt.

“Speaker Boehner needs to have an adult moment right here and now,” the senator told reporters.

Schumer, who has alternated between being a close ally and a rival of Wall Street financiers, reiterated past warnings that Congress must act fast to avoid repercussions. “If nothing’s happening by July 15 or so, the markets are going to start getting really worried,” he said.

It was unclear late Monday how Boehner’s demands measure up to the various debt-reduction plans that have already been proposed.

Both the House GOP budget plan, drafted by Budget Committee Chairman Paul Ryan (Wis.), and a package assembled by Obama’s bipartisan fiscal commission call for reducing borrowing by about $4 trillion over the next decade. In a speech last month, the president outlined a plan to trim borrowing by $4 trillion over 12 years.

Stated differently, Obama’s plan calls for about $7 trillion in new borrowing by 2021; both the Ryan blueprint and the fiscal commission’s proposal would hold new borrowing over the decade to about $5.4 trillion, according to an analysis by the bipartisan Committee for a Responsible Federal Budget.

Both Obama and his commission, however, would bridge at least part of the budget gap by increasing tax revenue, an idea that Boehner — and virtually every other Republican in Congress — has rejected. Without tax increases, the Ryan budget would rely on deep cuts in domestic programs — including a plan that would let states control how they use federal money for Medicaid — and a repeal of the provisions in Obama’s health-care law that expand coverage for the uninsured. It also would slice deeply into entitlement programs other than Medicare and Medicaid, such as farm subsidies and college loans.

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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