The ink is barely dry on the debt-ceiling legislation. But already the administration seems eager for a fight. Yesterday, the president’s National Economic Council director, Gene Sperling, wrote on the White House Web site:
There are now reports that this Joint Committee won’t be able to raise revenue at all because of the way the budget deal is drafted. That is simply wrong.
The Joint Committee is tasked with deficit reduction, and the Committee can reduce the deficit by cutting spending and getting rid of tax loopholes and expenditures. Everything is on the table, as it should be.
Understandably, the GOP leadership trying to push the bill through chose not to raise a fuss, no doubt believing this was simply an effort to sway Democrats who were still on the fence to vote for the debt-ceiling bill. But after the president himself suggested in his Rose Garden remarks that the legislation allows the Democrats to push for tax hikes, House Speaker John Boehner (R-Ohio) put out an unusually detailed statement, that read in part:
In fact, the legislation explicitly instructs the Committee to use CBO projections and explicitly references current law requirements to estimate how the Committee’s proposal “will affect the levels of such budget authority, budget outlays, revenues, or tax expenditures under existing law” (Section 405(b)(5)(D)(ii) of the Budget Control Act & Section 308(a)(1)(B) of the Congressional Budget Act).
The distinction is very important: Scoring the Committee’s deficit-reduction proposals using alternative baselines, as the White House would prefer, would allow it to propose the kind of large, job-destroying tax hikes that the President tried so hard to get during this round of negotiations. By contrast, scoring the Committee’s deficit-reduction proposals using existing law, which already assumes tax increases, would create significant structural impediments to raising taxes. . . .
For any tax rate increases to be scored as “reducing the deficit” relative to current law, those tax hikes would need to overcome the size of the tax increases that would occur if current tax rates were allowed to rise in 2013, as they are scheduled to do under current law. CBO is required to use a baseline that assumes all current law policy changes will occur, even though House Republicans will make certain that these assumed tax hikes never happen.
Furthermore, letting tax rates expire (i.e., imposing massive tax hikes on American families and job creators) would not achieve any “savings” for this Joint Committee, and there’s no reason the Committee would focus its attention on this futile effort.
In other words, the Democrats might be desperate to promise their liberal base that tax hikes are still possible, but it’s an empty promise. A Republican aide wasn’t sure what was behind the White House PR offensive on tax hikes. He e-mailed me: “I don’t really know if 1) they genuinely screwed up, or 2) they didn’t realize this would be such an issue and they’re scrambling to reassure their base.” Either way, it is telling sign about just how badly the debt ceiling bill is being received by the president’s liberal base.
UPDATE (8:37 p.m.): Boehner’s staff emails me to emphasize that while the statement appeared on the speaker’s Web site, it was penned by House Budget Committee chair Rep. Paul Ryan (R-Wis.) .