Speaker John Boehner and other House Republicans on Monday may have embraced Democrat Erskine Bowles’s general framework for attacking the national debt and averting the fiscal cliff, but Bowles quickly distanced himself from the GOP’s counter-offer to the administration.
“While I’m flattered the Speaker would call something ‘the Bowles plan,’ the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson-Bowles plan, nor is it the Bowles plan,” Bowles, the former co-chairman of a presidential fiscal reform commission, said in a statement. “In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time…. It is up to negotiators to figure out where the middle ground is today. Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy.”
The counteroffer was shot down by the White House, which said the $2.2 trillion offer of spending cuts, entitlement reforms and $800 billion in new tax revenue “includes nothing new” and was not serious. It also faulted the proposal for lowering tax rates on the wealthy. - Read Erskine Bowles’s statement here
BACKLASH FROM THE BASE Conservative Republican lawmakers and groups also dismissed the counteroffer. Sen. Jim DeMint, said in a statement early Tuesday that Boehner’s plan would “destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny.”
Tim Phillips, president of the conservative action group Americans for Prosperity, joined in the criticism: “After immediately giving in to higher taxes following the election, the Speaker has now followed up by pulling the best parts of the House budget off the table. The only way to solve the nation’s fiscal woes is to reform the runaway entitlement programs and government spending. It is disturbing that this proposal may give up the entire FY2013 spending reductions agreed to in the Budget Control Act.” - Read more at The Hill
NEW ENTRY TO TAX-REFORM FRAY A group of Democrats with close ties to the Obama and Clinton administrations have now entered the tax-reform fray with an overhaul plan that would raise an additional $1.8 trillion in revenue over the coming decade.
The authors include Robert Rubin and Lawrence Summers, both former Treasury secretaries to Bill Clinton, and William Daley, President Obama’s previous chief of staff. They’re pushing for $200 billion more in tax revenues than Obama is seeking, and $1 trillion more than the Republican plan.
Here are the highlights:
• Increase top marginal income-tax rate for those earning $422,000 or more annually to the Clinton-era 39.6 percent, while keeping other rates where they are, at the Bush-era levels.
• Limit deductions for high-income taxpayers.
• Increase the top capital gains tax rate from 15 percent to 28 percent, as it was under President Ronald Reagan.
• Eliminate the Alternative Minimum Tax.
• Repeal the “carried interest” break that taxes the fees charged by investment fund managers at the lower capital gains rate instead of the higher rate on ordinary income.
• Collect revenue from taxes on cigarettes, alcoholic beverages and Internet gambling.
• Close tax loopholes.
• Simplify tax filing. - Read the report here
ADVICE FROM WALL STREET Reuters columnist Jeffrey Goldfarb has offered lawmakers in Washington a little advice about how to successfully get a fiscal cliff deal done: Treat negotiations like a business, not a sideshow.
“When it comes to deal-making, Washington could learn from Wall Street,” Goldfarb wrote today. “The U.S. budget talks have become the equivalent of an ugly, public merger proxy battle. While investment bankers are often too eager to push for a deal, they also know that negotiating in public usually only makes things tougher…. Ultimately, most successful takeover battles end up behind closed doors with the respective leaders figuring out how a deal can be done, not fighting to prevent one.” - Read more at Reuters
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