WASHINGTON — President Barack Obama is renewing an old fight with the business community by insisting that $400 billion in tax increases be part of a deficit-reduction package. His proposals have languished on Capitol Hill, repeatedly blocked by Republicans, often with help from Democrats.
Some would raise big money. Limiting tax deductions for high-income families and small business owners could raise more than $200 billion over the next decade. Others are more symbolic, such as scaling back a tax break for companies that buy corporate jets.
The corporate jet proposal would raise $3 billion over the next decade, according to GOP congressional aides. That's a relatively small sum in the big scheme of Washington budgets, but Obama and Democrats call attention to it repeatedly in their effort to portray Republicans as defenders of corporate fat cats.
No matter how Democrats characterize their proposals as revenue raisers or plugging tax loopholes, GOP leaders oppose them all, arguing that raising taxes in a bad economy would only make matters worse.
"If we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil and natural gas companies that are making hundreds of billions of dollars," Obama said this week, "then that means we've got to cut some kids off from getting a college scholarship, that means we've got to stop funding certain grants for medical research, that means that food safety may be compromised, that means that Medicare has to bear a greater part of the burden."
The White House has identified about $600 billion in tax increases it wants over the next decade. About $400 billion of them were offered as part of deficit-reduction talks led by Vice President Joe Biden. That would be paired with more than $1 trillion in spending cuts.
Some of the tax proposals are vague and budget experts have yet to calculate just how much they would raise. For example, limiting deductions for high-income families and small businesses could raise anywhere between $210 billion and $290 billion, depending on what threshold is established as high income.
Obama is proposing to eliminate $41 billion in tax breaks for oil and natural gas companies, raise taxes on investment fund managers by $21 billion and change the way many businesses value their inventories for tax purposes. The change in inventory accounting would raise an estimated $70 billion over the next decade, hitting manufacturers and energy companies, among others.
Treasury Secretary Timothy Geithner has given Congress an Aug. 2 deadline for raising the current debt ceiling, currently $14.3 trillion, to avoid defaulting on the government's financial obligations for the first time in the nation's history. He warns that a default could trigger potentially dire consequences for an already anemic economy, including higher interest rates, tighter credit and new rounds of job layoffs. The government hit the debt ceiling in May and has been juggling accounts since then to make all its payments.
Obama says he is proposing a balanced approach that spreads the pain among people who rely on government services and those most able to finance them.
While Republican leaders argue that raising taxes is bad policy, bad politics and too unpopular to pass the Republican-controlled House, several GOP senators have said they are willing to consider eliminating unspecified tax breaks to reduce the deficit.
Two weeks ago, 33 Republican senators joined a 73-27 majority to repeal a $5 billion annual tax subsidy for ethanol gasoline blends. On Wednesday, Sen. Ron Johnson, R-Wis., said, "I would like to do away with special tax breaks but not legitimate business deductions."
But GOP leaders insist there is no support among Republicans to impose the kind of tax increases Obama is proposing.
- GOP: Lois Lerner's IRS emails show bias...
- Witnesses at Utah trial: No security-camera...
- No national launch for Draft Mitt effort
- NTSB: Plane that crashed in Arizona killing...
- GOP-led House ready to OK lawsuit against Obama
- Probe exposes flaws behind HealthCare.gov...
- Ginsburg: High court won't 'duck' gay marriage
- The rise of social entrepreneurship: How...
- US Court: Virginia marriage is for all... 52
- Obama to GOP: 'Stop just hating all the... 45
- GOP-led House ready to OK lawsuit... 34
- GOP: Lois Lerner's IRS emails show bias... 28
- Most Americans believe the U.S. should... 27
- GOP-led House approves lawsuit against... 14
- Democrats have million-dollar day on... 13
- Israel hits symbols of Hamas rule;... 12