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July 10, 2011 in Nation/World
GOP halves debt proposal
Disagreement over tax hikes scales plan down to $2 trillion
President Barack Obama meets with congressional leadership in the Cabinet Room of the White House on Thursday to discuss the debt. From left: House Majority Leader Eric Cantor, Virginia; House Minority Leader Nancy Pelosi, California; House Speaker John Boehner, Ohio; the president; and Senate Majority Leader Harry Reid, Nevada.
(Full-size photo)
WASHINGTON – House Republican budget negotiators have abandoned plans to pursue a massive $4 trillion, 10-year deficit reduction package in the face of stiff GOP opposition to any plan that would increase taxes as part of the deal.
House Speaker John Boehner informed President Barack Obama on Saturday that a smaller agreement of about $2 trillion was more realistic.
In a statement issued Saturday evening, Boehner said: “Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes.”
The White House responded that Obama will continue to push to make as much progress on deficit reduction as possible.
Boehner’s statement came a day before he and seven of the top House and Senate leaders were scheduled to meet at the White House in a negotiating session and lay out their remaining differences.
A deficit reduction deal is crucial to win Republican support for an increase in the nation’s debt ceiling. The government’s borrowing capacity is currently capped at $14.3 trillion, and administration officials say it will go into default without action by Aug. 2.
Obama tried to build political support for an ambitious package of spending cuts and new tax revenue that would reduce the debt by $4 trillion over 10 years. But from the moment he proposed it, Republicans said they would reject any tax increases, and Democrats objected to spending cuts in some of their most prized benefit programs, including Medicare, Medicaid and Social Security.
A bipartisan group of lawmakers led by Vice President Joe Biden had already identified, but not signed off on, about $2 trillion in deficit reductions, most accomplished through spending cuts.
But after holding a secret meeting with Boehner last weekend, Obama and his top aides said they believed an even bigger figure was attainable if both parties made politically painful, but potentially historic, choices.
In the end, the pressure from both sides was pushing against Obama’s bigger goal.
“I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase,” Boehner said.
White House Communications Director Dan Pfeiffer said Obama intended to continue to push for as big a deficit reduction number as possible and that tax revenue be part of the mix.
“The president believes that solving our fiscal problems is an economic imperative. But in order to do that, we cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts,” Pfeiffer said. “We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree.”
Pfeiffer said: “Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington.”
A Republican official familiar with the discussions said taxes and the major health and retirement entitlement programs continued to be sticking points.
Obama wanted Republicans to accept closing corporate tax loopholes and subsidies to corporations, ending a tax friendly inventory accounting system for businesses, as well as reducing the value of tax deductions for wealthy taxpayers.
A senior administration official said the discussion on taxes broke down over the administration’s desire to have the wealthy pick up a bigger share of the tax revenue load than Republicans were willing to accept.
The official, speaking on the condition of anonymity because of the sensitivity of the negotiations, said the $2 trillion to $2.4 trillion in deficit reduction identified by the Biden-led negotiations remains under negotiation and will also require some new tax revenue of up to $400 billion.
Earlier Saturday, in his weekly radio and Internet address, Obama appealed to Democrats and Republicans to “make some political sacrifices” and take advantage of an extraordinary opportunity to tackle the government’s budget crisis.
He said that it will take a “balanced approach” that mixes limits on domestic programs and the Pentagon, curbs to Medicare and elimination of some tax breaks for the wealthy.
But even as the negotiators sought a deal to bring the deficit under control, Obama’s Democratic allies and GOP rivals seem to find their options limited by months of angry rhetoric and political posturing.
Underscoring the divide between both sides, a spokesman for Senate Republican leader Mitch McConnell said Saturday evening that McConnell did not want to raise taxes “in the middle of a jobs crisis.”
The spokesman, Don Stewart, said McConnell wants Obama to press members of his own party to take steps to reduce spending on the big entitlement programs.
House Rep. Chris Van Hollen of Maryland, one of the original Democratic negotiators in the Biden talks, placed the blame on Republicans for the failure to agree to a larger figure.
“It’s disappointing that the Republican fixation with protecting tax breaks for corporate special interests and the very wealthy prevented them from agreeing to a balanced and broad deficit reduction plan to help our economy and our country,” he said.
© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Stocks plummet as outlook in Europe dims 
drywitt99 on July 10 at 3:56 a.m.
There are only 2 ways to return a semblance of fiscal responsibility to Washington.
Spending cuts. Tax increases.
President Obama has expressed a willingness to reduce spending in areas near and dear to his party, even though those reduction might harm him politically.
That is LEADERSHIP.
The Republicans want greater spending reductions…..and on the matter of tax increases……they draw a line in the sand.
Hell….they build a castle wall ….topped with razor-wire……with a moat filled with alligators!
No tax increases. None…nada….bupkiss!! They refuse even to discuss the matter!!
Far from leadership. This is demagoguery. With a heaping helping of greed and class warfare….teabagger style.
Tax cuts for the rich. And the hell with everyone else!!
President Obama is displaying the leadership we need.
Republicans…..the blind intransigence we have come to expect.
It is clear that compromose is called for. Select spending reductions and tax increases.
It’s what the President wants. It what the American people expect.
But the Republicans…..and their teabagger puppet masters….are deaf to the obvious.
Are they that stupid???
Well….as an “authentic” drywitt once wrote:
“You can lead a horticulture…..but you can’t make her think.”
And apparently the Republicans are intent upon proving that to be true.
Bruce (aka thatoneguy) on July 10 at 5:59 a.m.
^ I LOVE Dorothy Parker.
Ninch on July 10 at 7:54 a.m.
Why “misjustice” do you insist on such gross (almost obscene) language as “boner” and “impotent boner” and “teabaggers?”
BTW: I thought you would be happy with the GOP “backing down?”
It also appears that negotiation, collaboration, compromise are not in your vocabulary… even though the final proposal would result in an agreed upon proposal that is good for the American people. Unlike Obama and his “progressive” Dems (who insist on tax increases) and additionally demonize the GOP proposals to the detriment of America and job creation, the FISCAL CONSERVATIVES (Tea party, GOP, and some Dems) are authentically trying to fix the debt problem.
P.S. When is Obama going to figure out that Americans know that he speaks with “forked tongue,” out of both sides of his mouth, and is trying to play both sides? No one trusts the “hope and change” community organizer anymore. Not even his base, who has invested so much in his promises that they choose not to critically analyze Obama’s performance.
detroitdude on July 10 at 8:21 a.m.
“Unlike Obama and his “progressive” Dems (who insist on tax increases) and additionally demonize the GOP proposals to the detriment of America and job creation, the FISCAL CONSERVATIVES (Tea party, GOP, and some Dems) are authentically trying to fix the debt problem.”
Actually no, Obama talked about having this done months ago, and yet here we are, as usual, the GOP has to be dragged kicking and screaming in order to do ANYTHING.
Diana on July 10 at 8:39 a.m.
Ninch, cupcake, if Tammy Faye Boehner and his party didn’t want to be called teabaggers, they shouldn’t have called themselves teabaggers. My goodness, some people have such dirty minds.
http://theweek.com/article/index/202620/the-evolution-of-the-word-tea-bagger
DickAdams on July 10 at 8:47 a.m.
The following paragraph in the story says it all:
“But even as the negotiators sought a deal to bring the deficit under control, Obama’s Democratic allies and GOP rivals seem to find their options limited by months of angry rhetoric and political posturing.”
Political posturing is all these career political pimps ever do. More especially those (from both parties) running to be reelected to office. The story as a whole, is digested food through the bull.
Ninch on July 10 at 8:47 a.m.
I am not a cupcake… but please note it is all about context. Read my post again… because it is how words are combined to form meaning.
Ninch on July 10 at 8:51 a.m.
Hey, detroitdude… Note that Obama’s words mean nothing because he parses and switches up in every speech. He is just hoping that his base picks out what they want to hear.
detroitdude on July 10 at 9:00 a.m.
@Ninch: I don’t deny that he flip flops on a lot of things. Please don’t think I sit around all giddy each day because Obama is President. However, what both sides are trying to do, could be done with just a little compromise, I agree with DickAdams, it’s all posturing because Obama, Boehner, and everyone else, this is all they know. It’s more BS from both sides. It just seems that every time they sit down to talk, Republican’s pompously storm out, just dragging this out further. For all the career politicians, do they not realize they are NEVER going to get EVERYTHING they want? It’s not possible, but what is possible is to find a semi-happy medium. For as much as we pay ALL of these fools, they owe it to US to get a deal done. Their pay is at an all time high and yet their productivity and legislative ability is “bankrupt” for lack of a better word. Seriously, you could replace them with a bunch of 6th graders and the outcome would probably be better and faster.
greenlibertarian on July 10 at 9:26 a.m.
All smoke and mirrors.
When I see a proposal to cut the entirely bloated Defense Department by at least 25%, I’ll know someone is serious about deficit reduction.
Oh, and when they raise the tax on pure gambling- hedge funds, from a paltry 15%, I’ll also know someone is serious about reducing the deficit.
gmorton on July 10 at 9:58 a.m.
musjustice wrote,
“Mr. Boner is backing down, AGAIN?”
Huh? I haven’t seen Boehner give an inch on taxes. What are talking about?
gmorton on July 10 at 10:02 a.m.
greenlibertarian wrote,
“When I see a proposal to cut the entirely bloated Defense Department by at least 25%, I’ll know someone is serious about deficit reduction.”
Good point.
“Oh, and when they raise the tax on pure gambling- hedge funds, from a paltry 15%, I’ll also know someone is serious about reducing the deficit.”
You blew it on that one, though. All investments are gambling. (But I agree that capital gains should be taxed at the same rate as all other income).
Scoutster on July 10 at 10:46 a.m.
Rather than jump to the negative, perhaps we can see the glass as half full. It would be a great thing for the country if a Grand Bargain that is bigger than just the next election is struck.
Tip and RR did it in the early 80’s, and although lots of folks on both sides didn’t like it at the time, it proved to be a solid foundation for a number of years (until the recession during HW’s term, which he didn’t cause but for which he was punished).
This is how our system works.
Compromise and factionalism. Read Federalist #10.
misjustice on July 10 at 11:03 a.m.
@ gmorton, he wimped out in April of this year; he was gloating that he’d cut 61B from the budget and settled for (around) 38B as I recall.
hawken on July 10 at 11:19 a.m.
Raise taxes on the job producers,,,,, kill jogs,,,, extend Obama’s 30 month extended unemployment, 16.2% real, U6 unemployment,,, then to depression.
This is not rocket science.
Obama and his failed, Keynesian left, Economic theory is tracking the same, failed course as Keynesian, FDR and his failed policies.
Those whom ignore history are destined to repeat it. Just as we are doing today.
Obama and his liberal left, are “Keynesian on Steroids.”
SMARTGUY on July 10 at 1:49 p.m.
4 trillion to two trillion, that says it all
greenlibertarian on July 10 at 7:02 p.m.
It’s time to put the lie to this troll’s idiocy. The quote from FDR’s Treasury Secretary is suspect and unsourced.
One glaring problem is that FDR had not been in office 8 years in 1939.
He’d only been in office for six years in 1939.
Figgers the troll would be posting such ignorance.
gmorton on July 10 at 7:43 p.m.
greenlibertarian wrote,
“The quote from FDR’s Treasury Secretary is suspect and unsourced.”
Source: John Morton Blum, Roosevelt and Morgenthau (Houghton Mifflin, 1970) p. 256.
Not online.
hawken on July 10 at 8:08 p.m.
Greenliberal: here’s more relating to my quote above…
hawken on July 10 at 8:33 p.m.
Greenliberal:
Now that you have several sources, this would be a good time to recant you accusation of liar, with an apology to me.
Of course, that would take at least a smidgeon of integrity.
greenlibertarian on July 10 at 8:55 p.m.
Unless and until someone examines the Congressional Record, likely hard copy, or scan of such, I see no reason to think this language is authoritative. The attribution clearly says, “After eight years of this administration…” [emphasis added]
The FACT remains that FDR had been in office for 6 years, 2 months, when Morgenthau supposedly said “after eight years of this administration.
Morgenthou was known as a stickler for details, for him to have made such a error would be quite surprising.
Blum, a respected historian, is never the less human and therefore imperfect. If he footnotes his assertion to the original source, the Congressional Record, then that may make his case more compelling.
But the original record of this utterance, if given, does exist somewhere, probably in the Library of Congress. That would be THE authoritative source.
hawken on July 10 at 9:14 p.m.
Greenliberal:
You have again demonstrated yourself to be a liberal, totally bankrupt of intellectual integrity.
You have two credible sources, two credible historians whom site the source,,,, from the congressional record. Still this is not good enough for you.
But, you the throw around liar all the time.
Therefore both Folsom and Blum, both current and credible, historians who are subject to the utmost of peer scrutiny,,, and public review,,,, are both liars along with me, according to you.
A normal person, would experience some “cognitive dissonance” doing what you have done with your accusation of liar. But, then, normal people have at least some small degree of integrity.
misjustice on July 10 at 9:24 p.m.
Green, I found the entire quote…the troll left out the part about how taxes had to be raised. He lifted only the part that Glenn Beck used to blubber about on his “show”, er when he had one, before he was jerked off the air.
Check out pages 41 and 42, the pertinent part about taxes follows the part lifted by the troll, “we are spending more…” the troll left out what follows…typical.
http://www.burtfolsom.com/wp-content/uploads/2011/Morgenthau.pdf
misjustice on July 10 at 9:29 p.m.
The principals in the transcripts were talking about creating a tax bill to use the revenue to balance the budget. Something the troll left out…btw.
hawken on July 10 at 9:39 p.m.
OK Greenliberal: Now that you have the congressional record where’s the apology for calling me a liar?
Er,,,, Misjudgment,,,, I cited two, prominent, credible historians, not Glenn Beck.
That’s your first Red Herring.
The second Red Herring is Morgenthau’s view on raising taxes more.
We all know that he and FDR were big tax and spend liberals that did great harm to this nation, to this day.
FDR raised the tax rate to 90%! Then wanted to raise it to 100%! And was still a far left, liberal, economic failure.
misjustice on July 11 at 12:26 a.m.
^ delusional…
drywitt99 on July 11 at 3:17 a.m.
Delusional Indeed!
Hawken,
So….the President raises taxes???
Is THAT what you are saying???
Really???
In the mid-to-late 1920s the top marginal tax rate was 25%.*
It jumped from 25% to 63% (a whopping 252% INCREASE)
under PRESIDENT HERBERT HOOVER.
REPUBLICAN!!!!!
This was accomplished by The Revenue Act of 1932,
NINE MONTHS BEFORE Roosevelt was elected!
A 252% INCREASE under a Republican president. WOW!!
As opposed to a 25% increase in 1936.
A 2.5% increase in 1941.
An 8.6% in 1942 after the was started.
A 6.8% in 1944.
A 3.2% REDUCTION in 1945.
So….the PRESIDENT RAISES TAXES????
REPUBLICAN HERVERT HOOVER RAISED TAXES 252%.
And…..during 8 years in office….REPUBLICAN DWIGHT EISENHOWER NEVER REDUCED TAXES!!!!!
The party of high taxes…..indeed!!
*Statistics courtesy of: http://www.taxfoundation.org/files/fed_individual_rate_history-20110323.xls
It lists the raw tax tables. You’ll have to do the math yourself.
ALWAYS a challenge for a Republican.
drywitt99 on July 11 at 3:48 a.m.
It should be noted that when a Republican president rased taxes by an unprecendented 252% in 1932 the Democrats held a mere one vote majority in the House.
Had the Repblican president held true to Republican principles and vetoed the legislation…..the veto would could not have been overriden.
drywitt99 on July 11 at 3:52 a.m.
So….if the Republican Eisenhower NEVER cut taxes from 91%….when did that start???
Oh…..in 1964….a 23% tax cut by Democrat Lyndon Johnson!!!!
Historical facts….oh they can reach up and bite us!!
But they do have a taste for the delusional!!
misjustice on July 11 at 8:26 a.m.
A big heaping serving of delusion with lots of ketchup on top!
The_Seer on July 11 at 8:51 a.m.
So someone explain to me how removing all this demand from an economy already beleaguered by horrible demand is a good idea? I’ve already heard gmorton’s delusional claim that it isn’t “real demand” just “free lunches” so save it….
Thanks for drywitt pointing out the hypocrisy of the GOP concerning taxes. Taxes will go up again when the baggers lose the house in 2012 and the Dem majority in the Senate is extended.
gmorton on July 11 at 12:34 p.m.
greenlibertarian wrote,
“Unless and until someone examines the Congressional Record, likely hard copy, or scan of such, I see no reason to think this language is authoritative.”
Morgenthau Diaries, microfilm Reel #50.
http://www.burtfolsom.com/wp-content/uploads/2011/Morgenthau.pdf
See pp. 41-42
gmorton on July 11 at 12:37 p.m.
Ah, misj beat me to it!
greenlibertarian on July 11 at 12:39 p.m.
Wow, just WOW, MisJ! Nice detective work.
The crux of what Morgenthau was saying was that taxes needed to be raised, especially on folks of his (high income) class, in order to help reduce the budget deficit.
The bulk of the testimony was about the political ramifications of whether FDR was on board and getting it through Congress.
gmorton on July 11 at 12:57 p.m.
misjustice wrote,
“The principals in the transcripts were talking about creating a tax bill to use the revenue to balance the budget. Something the troll left out…”
Two different issues. Keynesian theory holds that you deficit-spend during recessions, in order to “stimulate” the economy. You must deficit spend because raising taxes during a recession only further depresses the economy.
Morgenthau says that doesn’t work. “We’ve tried spending money. We’re spending more than we’ve ever spent before and it doesn’t work … we have just as much unemployment as when we started.”
The second issue is that now “We have an enormous debt to boot!”
To solve the second problem, Morgenthau wanted to raise taxes. He doesn’t know how to solve the first, but he’s convinced the Keynsian approach is doing more harm than good, by producing uncertainty (sound familiar?): “The biggest deterrent of all, I think, is that the country does not know when the end is in sight and this unbalancing of the budget, that’s the biggest deterrent of all and that’s what frightens people.”
It is also fightening investors and businesses today.
gmorton on July 11 at 1:01 p.m.
The_Seer wrote,
“I’ve already heard gmorton’s delusional claim that it isn’t “real demand” just “free lunches” so save it….”
Heh.
You can lead a horse to water . . .
gmorton on July 11 at 1:14 p.m.
greenlibertarian wrote,
“The crux of what Morgenthau was saying was that taxes needed to be raised, especially on folks of his (high income) class, in order to help reduce the budget deficit.”
Yes. He thought that deficit spending only aggravated the problem. He realizes that raising taxes during a recession is a bad idea (no one disagrees with that), but he thinks deficits are worse. He appears to *prefer* reducing spending (see his comment on the “Agriculture bill”), but is a lone wolf on that approach.