Boehner: Tax Reform, Yes. Tax Increases, No. Huh?
Policy + Politics

Boehner: Tax Reform, Yes. Tax Increases, No. Huh?

AP Photo/Evan Vucci

House Speaker John Boehner declared today that Republicans would oppose raising tax revenues as part of any bipartisan plan to reduce the long-term debt, while urging Congress and the new “Super Committee” to begin laying the ground work for a major overhaul of the federal tax system and entitlement programs including Medicare, Medicaid and Social Security.

Speaking before a luncheon gathering of the Economic Club of Washington, D.C., the Ohio Republican said that tax increases “are off the table” and should not be considered by the bipartisan joint House-Senate committee that began work this week to find at least $1.5 trillion in deficit reduction over the coming decade. If Boehner and the Republicans have their way, all the savings would come from government spending cuts and entitlement reforms.

“Yes, tax reform should include closing loopholes, not for the purpose of bringing more money to the government but because it’s the right thing to do,” Boehner said. “Tax increases, however, are not a viable option for the joint committee. Tax increases destroy jobs, and the joint committee is a jobs committee. Its mission is to reduce the deficit that is threatening job creation in our country.”

Boehner essentially laid down the Republicans’ rejoinder to President Obama’s recent demands for rapid congressional action on his $447 billion jobs creation plan – mostly financed by tax increases on the wealthy – and a “Grand Bargain” of spending cuts, tax increases and entitlement reforms that could achieve $4 trillion of deficit reduction over the coming decade.

Boehner said that the key to jumpstarting the economy and reining in a $1.5 trillion annual deficit is to “liberate America’s economy” from excessive government regulations, the threat of tax hikes and out-of-control spending. While conceding that the Republicans might find “common ground” with Obama on some of his jobs proposals, he added,  “Let’s be honest:  The president’s proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America.”

Obama to Visit Boehner’s Home District
In recent days the president has been  traveling widely  to try to drum up support for his plan and put heat on the Republicans, including making an appearance in the Richmond, Va., district of House Majority Leader Eric Cantor.  The White House said the president will travel to Boehner’s Cincinnati district next week to visit a crumbling bridge to highlight the new infrastructure projects his job-creation plan would create. Also today,   White House officials confirmed that Social Security reforms would be excluded from the deficit proposal Obama’s presents to the 12-member super committee next week.  

Democrats and Republicans have long clashed over the definition of a tax increase, especially within the context of fundamental tax reform. GOP leaders and conservative low-tax advocates such as Grover Norquist, president of Americans for Tax Reform, say they favor a comprehensive overhaul of the tax code and elimination of wasteful or unfair loopholes or deductions, but the with the goal of reducing tax rates – not raising tax revenue. Even allowing the Bush era tax cuts to expire in 2012, as they are scheduled to do by law, would constitute a tax increase, said  Boehner. “When you raise somebody’s taxes, it’s a tax increase,” he quipped.

In contrast, Obama and congressional Democrats insist that any long-term deficit plan must include tax increases as well as spending cuts, and that tax reform that closes loopholes and eliminates overly generous deductions is one way of doing that. Democrats say it would be grossly unfair to put the burden of deficit reduction solely on the backs ofmiddle and lower income Americans, who would suffer most from government cuts, without requiring wealthier Americans to share in the burden by paying higher taxes.

But by drawing a line on the tax issue in his speech today, Boehner became the first leader to try to impose conditions on the 12-member debt super committee,  which is tasked with reaching a deal before Thanksgiving to reduce deficits by $1.5 trillion over the next decade, or risk $1.2 trillion in across-the-board spending cuts.. Leaders of both parties as well as the co-chairs of previous debt-reduction efforts   have called for the group to “go big” and aim for as much as $4 trillion in deficit savings.

Boehner called on Obama to “meet this standard” of no tax increase when he sends details of his approach to major deficit reduction to the super committee next week, but there is little chance for that. On Monday Obama  announced plans to fund his $447 billion jobs bill largely by raising taxes on wealthier families  – and asked the joint committee to consider his plan. At a Rose Garden ceremony to promote the bill before he formally sent it to Congress, the president urged the public to pressure lawmakers to quickly approve the package.

The White House said Congress should pay for the jobs plan by imposing new limits on itemized deductions for individuals who earn more than $200,000 a year and families earning more than $250,000. Eliminating those deductions would bring in an additional $400 billion in revenue, aides said. The administration also recommended ending subsidies for oil and gas companies and changing the depreciation rules for corporate airplanes.

Altogether, White House aides said the tax package would raise $467 billion, more than enough to pay for the new jobs bill.

The heart of the plan calls for new highway, bridge, and mass transit spending; housing aid, including an expanded program for refinancing properties; aid to the states; and new programs to help retrain the unemployed and assist them in finding work. Obama also urged Congress to extend a 2-percentage point payroll tax cut and unemployment benefits for the long-term jobless, as well as approve other tax cuts and incentives to put cash in Americans’ pockets and spur business to hire more workers. 

Boehner didn’t specify which of the president’s proposals the GOP might support, but he took a potshot at incentives for encouraging businesses to hire new workers.  “Businesses are not going to hire someone for a $4,000 tax credit if government mandates impose long-term costs on them, significantly exceeding the temporary credit,” said Boehner.

His speech was reminiscent of the speaker’s address to the New York Economics Club last May, when he staked out the Republicans’ position on raising the $14.3 trillion debt ceiling, including that Congress and the administration would have to offset any increase in the government’s borrowing authority with an equivalent amount of deficit reduction. In the end, Republicans achieved most of their goals in tough negotiations with the White House and Democratic leaders; he predicted they would get their way on many issues again.

“When it comes to producing savings to reach its $1.5 trillion deficit reduction target, the joint select committee has only one option: spending cuts and entitlement reform,” he said.