Where Do We Begin

November 16, 2012

I don’t believe anyone thought

 

That the fiscal cliff

 

Would include a complete review

 

Of our Military and Intelligence command

 

 

 

It seems that while the country

 

Was wallowing in debt

 

The good ole boy network

 

Were all out there

 

Enjoying themselves

 

 

We speak of the integrity and sacrifices

 

Made by our forefathers

 

To help establish

 

This great nation

 

 

Yet we soon forget

 

The sacrifices they made

 

 

There are 3 major issues

 

That must be addressed by the

 

End of this year…..

 

 

The Bush Tax Cuts

 

 

The Payroll Tax Holiday

 

 

The $16 Trillion Debt Ceiling

 

 

 

I hear people saying

 

 

Go over the cliff….

 

 

 

Then go back and fix it

 

 

In 2013

 

 

 

This has been bantered around

 

For the last 2 years….

 

 

 

What makes people think that…..

 

 

 

2013 will be the cure all

 

 

 

This is not a…..

 

 

Democratic

 

Or

 

Republican Issue

 

 

 

This has to be settled in a

 

Bipartisan effort

 

 

 

We need a strong

 

Federal Government

 

 

But it is bloated and

 

 

 

Waste too much money

 

 

 

The Bush tax cuts

 

Were put into place

 

12 years ago

 

 

 

In the meantime

 

We engaged ourselves

 

In 2 wars

 

 

 

Which we did not have

 

The money to pay for

 

 

 

A bipartisan resolution should focus on

 

 

 

Creating Jobs for the future

 

 

Cutting Cost

 

 

 

Raising Revenue

 

 

 

Balancing the Budget

 

 

And

 

 

 

Long Term Deficit Reduction

 

 

 

 

The finger pointing must stop….

 

 

 

It was the abuses of both parties

 

That put us in this position

 

 

 

A Vision must be set

 

To both inspire

 

And lift up

 

The citizens of

 

The United States

 

 

 

The whole world looks to us

 

 

As the land of opportunity

 

 

 

Let’s quit bickering

 

 

And work together

 

 

To restore the integrity

 

 

That the world aspires

 

 

To see in us

 

Find us on the web www.hutchinsonbusinesssolutions.com

By Editorial Board, Published: September 10The Washington Post

THE SIMPSON-BOWLES commission recommended that the federal government undertake $4 trillion in debt reduction. So did President Obama. Mr. Obama’s advocates want to make it appear that the two $4 trillion figures are equivalent.

“He has offered a reasonable plan of $4 trillion in debt reduction over a decade,” former president Bill Clinton said last week in his Democratic convention speech. “That’s the kind of balanced approach proposed by the Simpson-Bowles commission, a bipartisan commission.”

“He put forward a budget . . . that would get to the $4 trillion goal that came from Bowles-Simpson,” Obama economic adviser Austan Goolsbee said on “Fox News Sunday.”

Not exactly. First of all, the Simpson-Bowles plan envisioned $4 trillion in debt reduction over nine years; the president’s plan would spread the cuts over 10 years — a difference that matters because the value of the savings piles up at the end of the window. For instance, the Simpson-Bowles report shows $817 billion in deficit reduction in 2020 alone. Another year makes a huge difference.

Second, Simpson-Bowles assumed the expiration of the Bush tax cuts for the wealthiest Americans before laying out its $4 trillion in reductions. In budget-speak, that was built into the base line. The Obama plan counts as “savings” allowing the top-end Bush tax cuts to expire ($849 billion from 2013 to 2022) along with keeping the estate tax at its 2009 level ($119 billion over the same 10 years). Again, another huge difference.

Lastly, Simpson-Bowles assumed lower spending on the wars in Iraq and Afghanistan. The president’s plan pads his debt reduction with “savings” in comparison to the wars continuing at the same pace for a decade. This amounts to an $800 billion difference.

When the president released his budget in February, the Committee for a Responsible Federal Budget assessed its savings to be “far below those” of Simpson-Bowles. After aligning assumptions, the nonpartisan committee found Mr. Obama’s $4.3 trillion to be comparable to $6.6 trillion of Simpson-Bowles savings. That’s a difference of $2.3 trillion, or more than 50 percent.

The best measure of whether the country is on a sustainable fiscal path is where federal debt would stand as a share of gross domestic product. At the end of a decade, the Obama plan would have debt at an unhealthy 76 percent of GDP, according to the Congressional Budget Office. The comparable ratio from Simpson-Bowles: 69 percent, still high but less troubling. At least as important, the president’s plan would leave the debt stuck at that level. Simpson-Bowles would put it on a downward path.

Mr. Obama can claim to have outlined an initial plan to tackle the debt, one that follows the Simpson-Bowles approach of combining revenue increases with spending cuts. He can claim that his plan, unlike Mitt Romney’s, has detailed proposals behind the numbers. He can claim to have achieved $1 trillion of the promised savings already, through spending cuts.

But Mr. Obama cannot claim to be seeking anywhere near as much in debt reduction as his appointed commission said was needed to preserve the nation’s fiscal health.

Posted by Ezra Klein on August 28, 2012 at 1:10 pm

On the Republican convention stage tonight, you’re going to see a really large clock. But the clock isn’t for keeping time. The idea isn’t to stop speakers from going over their allotted time, or the convention from running late. It’s a debt clock. And the idea is to blame President Obama and the Democrats for the national debt.

But in doing so, the Republicans will end up blaming Obama for the policies they pushed in the Bush years, and the recession that began on a Republican president’s watch, and a continuation of tax cuts that they supported. They’ll have to. Because if they took all that off the debt clock, there wouldn’t be much debt there to blame him for at all.

The single thing you should look at to understand the debt clock and what it is — or isn’t — telling you is this graph from the Center on Budget and Policy Priorities. It does something very simple. It takes public debt since 2001 — which is when we last saw surpluses — and breaks it into its component parts.

You can see it kind of looks like a layer cake. In fact, the folks at the Center on Budget and Policy Priorities call it “the parfait graph.”

The top layer, the orange one, that’s the Bush tax cuts. There is no single policy we have passed that has added as much to the debt, or that is projected to add as much to the debt in the future, as the Bush tax cuts, which Republicans passed in 2001 and 2003 and Obama and the Republicans extended in 2010. To my knowledge, all elected Republicans want to make the Bush tax cuts permanent. Democrats, by and large, want to end them for income over $250,000.

In second place is the economic crisis. That’s the medium blue. Recessions drive tax revenue down because people lose their jobs, and when you lose your job, you lose your income, and when you lose your income, you can’t pay taxes. Tax revenues in recent years have been 15.4 percent of GDP — the lowest level since the 1950s. Meanwhile, they drive social spending up, because programs like unemployment insurance and Medicaid automatically begin spending more to help the people who have been laid off.

Then comes the wars in Iraq and Afghanistan. That’s the red. And then recovery measures like the stimulus. That’s the light blue, and the part for which you can really blame Obama and the Democrats– though it’s worth remembering that Senate Republicans proposed and voted for a $3 trillion tax cut stimulus that would all have gone on the national credit card and added almost four times what Obama’s stimulus added to the debt.

Then there’s the financial rescue measures like TARP, which is the dark blue line. That’s almost nothing, as much of that money has been paid back.

If we didn’t have all that? If there’d been no Bush tax cuts, no wars, no financial crisis and everything else had been the same? Debt would be between 20 and 30 percent of GDP today, rather than almost 100 percent.

Now, the response you sometimes get to this graph is yes, that’s true, but Obama should have done more about the debt. But Obama has proposed a multi-trillion dollar deficit reduction plan. Republicans just refused to pass it. And, to be fair, he refused to sign their plan too. So the question then is less about what led to the debt and more about who has the right plan to get rid of it. I’ll get into that in a subsequent post.

Smoke and Mirrors

August 3, 2011

The debt ceiling was finally raised this week.

The US will not default.

But how come I do not feel any better?

I kept listening to both sides…

Looking for that golden nugget

Will someone finally look at the whole picture

And come up with a meaningful plan?

Republicans want to cut cost

Are they really cutting cost?

All they are doing is cutting the amount of future increases

Not real cost

The democrats want to cut cost (future increases)

And raise taxes

Let’s make everyone pay their fair share

The bottom line there will be $1T dollars in cost reduction
in the

Next 10 years

Congress will form a special committee to recommend

$1.5T dollars of additional cost reductions

To be implemented over the next 10 years

All the while

The US deficit  is
projected to grow an

Additional $8 Trillion dollars

From $14.3 trillion dollars to $22.3 trillion dollars

Is this really cutting cost?

What steps are being taken to help…

Grow the economy….

Create jobs….

Restore confidence……

In America’s future?

We are currently borrowing 43 cents of every dollar we spend

At the current pace…

How long will this be

Sustainable?

The US cannot borrow its’ way out of this dilemna

We must devise a plan for the future

One that will rebuild our economy

Help put people to work

Promote stability

And insure prosperity for America’s future

Our forefathers had their disagreements…

But their goal was always for

The common good of the nation

They undertook projects

That they knew would not benefit them

But would provide for the future

What steps are we taking to insure a better future?

For our children and our grandchildren?

Have we allowed our political leaders to become

Complaisant

As reported by HuffingtonPost  by Sam Stein and Elise Foley

WASHINGTON — Congressional leaders and President Obama on Sunday night announced they’ve cut a deal to avert a historic U.S. default, saying they have assembled a framework that cuts some spending immediately and uses a “super Congress” to slash more in the future.

The deal calls for a first round of cuts that would total $917 billion over 10 years and allows the president to hike the debt cap — now at $14.3 trillion — by $900 billion, according to a presentation that House Speaker John Boehner (R-Ohio) made to his members. Democrats reported those first cuts at a figure closer to $1 trillion. It was unclear Sunday night why those two estimates varied.

The federal government could begin to default on its obligations on Aug. 2 if the measure is not passed.

The next round of $1.5 trillion in cuts would be decided by a committee of 12 lawmakers evenly divided between the two parties and two chambers. This so-called super Congress would have to present its cuts by Thanksgiving, and the rest of Congress could not amend or filibuster the recommendations.

But if the super Congress somehow failed to enact savings, the measure requires automatic cuts worth at least $1.2 trillion. Those cuts would be split equally between military and domestic programs. Social Security, Medicaid and programs for the poor would be spared, but Medicare providers — not beneficiaries — would take a hit.

White House officials confirmed that there would not be an extension of unemployment benefits as part of the final package. The administration had insisted that an extension be part of the grand bargain it was negotiating with Boehner. But when those discussions fell apart, so too did efforts to ensure that unemployment insurance was part of a final package. A senior administration aide added that the president would push for an extension in the months, if not weeks, ahead.

Some observers scored one victory for the president — the second round of cuts do not kick in until 2013, when the Bush-era tax cuts are set to expire. Having a fresh round of deficit reduction that is all cuts with no revenues could give the White House ammunition to end the tax cuts on wealthier Americans, as it failed to do last winter.

Though none of the leaders sounded pleased about the deal, they said they were relieved it may present a chance to avert default. President Obama seemed especially dissatisfied with the idea of the super committee, saying the leaders should have been able to accomplish all the cuts now.

“Is this the deal I would have preferred? No,” Obama said. “I believe that we could have made the tough choices required — on entitlement reform and tax reform — right now, rather than through a special congressional committee process.”

The two Senate party heads also expressed qualified support for the deal.

“Leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff,” Majority Leader Harry Reid (D-Nev.) said on the Senate floor Sunday night.

“At this point I think I can say with a high degree of confidence that there is now a framework to review that will ensure significant cuts in Washington spending,” said Minority Leader Mitch McConnell (R-Ky.)

“We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations,” McConnell added.

In spite of the guarded optimism, all sides will face quite a sales job in getting enough lawmakers in the middle to accept a deal.

Liberals were extremely displeased with the final result of the talks, which began with Democrats saying there should be no strings attached to a debt limit increase that would enable the country pay its bills.

Then they insisted that if deficit reduction was going to be linked to the debt limit, then closing loopholes and raising taxes on the rich had to be part of the deal.

They lost completely on both counts, and House Republicans managed to pull the entire deal further and further to the right, even inserting a requirement into the agreement for a vote on a balanced budget amendment to the U.S. Constitution.

Both the Congressional Black Caucus and the Progressive Caucus in the House had called emergency meetings for Monday as details of the plan started to leak. They seemed likely to oppose the deal.

One top House aide said his boss would vote against the measure, and the aide predicted Minority leader Nancy Pelosi (D-Calif.) would not be eager to whip her members to get on board.

“This is going to be close. I think in the end, the president and Nancy are going to have to twist arms, and I’m not sure how hard she’ll work to do that,” the aide said, noting that Pelosi still remembers the infamous TARP vote where she delivered 150 of her members but Boehner did not get 100 of his.

Many of Boehner’s freshman Tea Party members also are likely to find the proposal tough to swallow, since many wanted no hike in the borrowing limit to begin with. They also wanted the passage of a balanced budget amendment to be a prerequisite for increasing the debt ceiling.

Both sides can afford to lose members if 217 representatives can still back the plan.

Boehner’s talk to his 240 members Sunday night had the greatest note of triumph.

“Now listen, this isn’t the greatest deal in the world,” he said, according to remarks his office sent out. “But it shows how much we’ve changed the terms of the debate in this town.”

He also sounded a note of vindication.

“There is nothing in this framework that violates our principles. It’s all spending cuts. The White House bid to raise taxes has been shut down,” Boehner crowed. “And as I vowed back in May — when everyone thought I was crazy for saying it — every dollar of debt-limit increase will be matched by more than a dollar of spending cuts.”

Notably, Pelosi was the only of the four congressional leaders not to pledge support for the plan.

“I look forward to reviewing the legislation with my Caucus to see what level of support we can provide,” she said in a statement.

As reported in Huffinton Post by Ryan Grim and Elise Foley

WASHINGTON — More than half the Senate was convened early Tuesday morning by Sen. Mark Warner (D-Va.) for a briefing on a deficit-reduction plan being negotiated by group of five senators from both parties once known as the “Gang of Six.”

The gang had previously comprised six lawmakers before Sen. Tom Coburn (R-Okla.) abandoned the talks, rebuking Democrats for being unwilling to cut Social Security or Medicare. Yet Coburn had heavy praise for the plan outlined Tuesday morning, raising hopes (and fears) that the gang may be getting back together.

Senators were effusive about the plan after the briefing meeting, calling it “great” and saying it would likely gain support from a majority of the Senate. The plan includes $1.5 trillion in tax cuts, managed by spending caps and cuts to government programs.

“We’ve gone from a Gang of Six to a mob of 50,” said Sen. Joe Manchin (D-W.V.) after the meeting.

More than half of the Senate arrived to hear about the debt-reduction plan Tuesday morning, and the general atmosphere was positive, said Sen. Susan Collins (R-Maine).

“Everyone felt a sense of relief that there was a bipartisan, carefully constructed plan before us,” she told reporters outside the meeting.

A Senate Democratic aide familiar with the negotiations with Coburn said that the Oklahoma senator had refused Democratic entreaties, even after cuts to entitlements were offered. But now that the five other Senators are moving forward without him, the aide said, Coburn is more interested in being involved again.

// “This type of a wider audience may make him less important, particularly if there are other Republicans willing to step up,” said the aide.

A different Senate aide said it remains unclear whether there is enough time to move forward with the plan before Aug. 2, the date the Treasury Department predicts the federal government could begin defaulting on its debt. But Collins said the Gang has completed enough work on their deal that it could be ready in time for a pre-Aug. 2 vote.

“They have done so much work that a lot of the issues have been gone through, and they’re in the midst of drafting statutory language,” Collins said. “I believe it should be considered in conjunction with the debt ceiling plan.”

Sen. Kay Bailey Hutchison (R-Texas) said the plan could gain traction in the Senate and even in the Republican-controlled House, which is committed to major spending cuts.

“I think if you look at the details here, they will see it does lots of things they’ve called for,” Hutchison told reporters.

“They have come up with a plan that can get a majority vote in the Senate, very likely 60,” she said, adding she would vote for the plan. “The House should like this plan because it has spending cuts.”

UPDATE 1:45 p.m.: President Barack Obama expressed some support of the Gang of Six plan during remarks to the press on Tuesday, calling the plan a “very significant step” that is “broadly consistent with the approach that I’ve urged.”

“What it says is we’ve got to be serious about reducing domestic spending, both in domestic and in defense,” he said. “We’ve got to be serious about tackling health care spending and entitlements in a serious way and we’ve got to have some additional revenue so we have an approach in which there is shared sacrifice.”

UPDATE 2:10 p.m.: The Gang of Six plan is laid out in a summary flyer obtained by HuffPost and details the group’s proposal for cutting the deficit by more than $3.6 trillion over the next decade.

The plan would immediately cut $500 billion in spending to bring down the deficit. It would also include major tax cuts, with about $1.5 trillion in overall tax savings, its authors say.

But that estimate factors in a $1.7 trillion cut to the alternative minimum tax — a tax Congress already eliminates much of every year. But even with the AMT cuts, the package raises only a net $200 billion compared to cuts of more than $3 trillion — not exactly a balanced approach.

Much of the Gang of Six plan would require other agencies and Congressional committees to work to find savings, setting up guidelines for $80 billion in armed service cuts and $70 billion from health, education, labor and pensions. Under the plan, the Budget Committee would be required to set spending caps that would extend over the next decade.

UPDATE 3:10 p.m.: Senate Majority Leader Harry Reid (D-Nev.) threw some cold water on the Gang of Six plan Tuesday, voicing doubts that the plan could be scored and passed before the Aug. 2 deadline for raising the debt ceiling.

Reid said he got a call from Congressional Budget Office Director Doug Elmendorf, who said the plan would take at least two weeks to score for cost and savings, putting the completion of that work just beyond the Aug. 2 deadline. Reid called the plan “wonderful” and said he does not want to diminish enthusiasm over it, but said alternatives still must be considered.

Reid said Sen. Mark Warner (D-Va.), a Gang of Six member, would meet with him in the next 24 hours with parts of the plan that can be incorporated into a deal brokered by Reid and Senate Minority Leader Mitch McConnell (R-Ky.) to raise the debt ceiling.

Michael McAuliff contributed to this report.

Reported by Sam Stein for The Huffington Post

WASHINGTON — Sunday night’s much anticipated debt ceiling meeting between the president and congressional leadership managed to produce an outcome, just not the desirable one. Attendees did not find agreement on a package of cuts, revenues, or entitlement reforms. Instead, they settled on the decision to meet again and, perhaps after Monday’s meeting, again after that.

As the government approaches the August 2 date at which it will run out of cash, the need to hold meetings is the only thing both sides can agree on.

Sunday night proved no different, as lawmakers met in the Cabinet Room with no apparent budging from either end. According to multiple attendees, the discussion began with President Obama pressing, once more, for lawmakers to consider a “grand” bargain to end the debt ceiling debate, something that would combine $1 trillion in revenue raisers with $3 trillion in cuts, including reforms to Medicare and Medicaid and smaller tinkers to Social Security.

“The basic thrust of the meeting was the president making the case for why to do a big deal and putting it to everyone around the table: if not now, when? And if not the big deal, then what is the alternative, particularly given that it is the Republicans who have said we need to use this opportunity to do something serious about the deficit,” said a Democratic official briefed on the meeting. “The president is a bit frustrated too … He is out there. He is ready and willing to take political heat. He is already taking some heat.”

Less than 24 hours earlier, House Speaker John Boehner (R-Ohio) had formally rejected the very offer that Obama was pressing for, insinuating that it was too heavy a political lift and that negotiators would be better served building on the $2.4 trillion deal that Vice President Joseph Biden had been crafting in a series of bipartisan meetings with congressional leaders. Obama’s pitch did little to chip away at that opposition. The speaker, according to several sources briefed on Sunday’s meeting, did not say much during it, deferring instead to House Majority Leader Eric Cantor (R-Va.). But a Boehner aide made it clear after the fact that his boss hadn’t exactly been won over.

“The speaker told the group that he believes a package based on the work of the Biden group is the most viable option at this time for moving forward,” said the aide. “The speaker restated the fundamental principles that must be met for any increase in the debt limit: spending cuts and reforms that are greater than the amount of the increase, restraints on future spending, and no tax hikes.”

And so it went for roughly 75 minutes, as the eight congressional attendees, along with the president and vice president, spoke at varying lengths about not just the economic logic of their respective plans but the political arithmetic behind them.

Cantor and Senator Jon Kyl (R-Ariz.), the Senate minority whip, both insisted that a grand bargain did not have the votes needed to pass. “We should start talking about the Biden-type framework instead,” they added, according to a GOP source briefed on the meeting.

Biden, for his part, reminded the Republican attendees that the package they were now touting was one they had previously abandoned (both Cantor and Kyl walked away from the negotiating table when the talks turned to revenues). Besides that, he argued, it wasn’t really a package at all, but rather a list of goals with blanks requiring filling.

“The one really important point Biden made is that it is a bit of a fallacy to talk about the Biden framework as something that could just be taken off the shelf, because nothing was agreed to in those conversations and the vice president made it very clear that we weren’t going to [reach a deal] without revenues,” said the Democratic official briefed on the meeting.

If lawmakers wanted to go even smaller — say, take the $1 trillion in cuts that Biden and Republicans had pinpointed – they would have to convince the president first. Obama, according to a GOP aide, told attendees on Sunday that he would not sign a debt deal that didn’t go through 2013. He and Biden also made it clear that even the smaller packages would have to have a revenue component to earn their support.

For all the intractability, there were relatively few moments of tension on Sunday evening. According to those briefed on the exchanges, lawmakers took turns talking about their preferred approaches. There were some jabs thrown. Senate Majority Leader Harry Reid (D-Nev.), according to a Hill aide, accused the Republican Party of falling far short of their rhetorical bluster when the topic came to deficit reduction. He pointed to the fiscal commission, the Gang of Six negotiations, the Biden deal and Boehner’s refusal to craft a grand compromise with Obama as instances in which Republicans simply left the table when it came time to make tough choices. “Every time we try to do something big on this, you walk away,” the aide paraphrased him as saying.

By and large, however, the conversation was, as one Democratic official acknowledged, “cordial.” And that may be where the problem lies. With ten days to go before the president wants a bill presented — so that it can go through the legislative process in time to pass by August 2 — the sides are still dealing in broad strokes. Additionally, there isn’t a clear sense of what type of package could garner the necessary support. The president will be hosting a news conference on Monday before he meets with congressional negotiators once more. He left the meeting on Sunday telling them to have their schedules cleared or flexible for the full week.

“The president ended the meeting by saying we will come back here tomorrow and that we should be prepared to be here every day,” recalled the Democratic official briefed on the meeting. “He said, I want people to come back here tomorrow with an answer to the question: If not this, what is your plan and how are you going to get 218 votes [in the House] for it?”

As reported in Huffington Post

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.

“The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House,” Speaker John Boehner, R-Ohio, said. “The votes simply aren’t there, and they aren’t going to be there because the American people know tax hikes destroy jobs.”

Among the tax increases proposed by the White House and the amount they’d raise over the next decade:

_ Limit itemized deductions, including those for charitable contributions and mortgage interest, for families and small business owners making more than $500,000. Under current law, if a taxpayer’s top income tax rate is 35 percent – the highest rate – a $100 deduction is worth $35 in tax savings. For several years, Obama has proposed limiting itemized deductions for people making above $250,000 to 28 percent, meaning a $100 deduction would be worth only $28 in tax savings at most. That would raise $293 billion. Increasing the income threshold to $500,000 would raise “in the ballpark of $210 billion,” said Maryland Rep. Chris Van Hollen, one of the House Democratic negotiators in the Biden talks.

_ Change the way businesses value their inventory, raising an estimated $70 billion. Current law allows businesses to lower their taxable profits – and their tax bills – by using an accounting method that can inflate the cost of goods sold. Obama proposes to phase out the practice, known as last-in, first out, or LIFO.

_ Increase taxes on investment fund managers, mainly hedge funds and private equity firms, raising about $21 billion. Investment managers typically pay capital gains taxes on their fees, with a top rate of 15 percent. Obama wants to tax the fees as regular income, with a top tax rate of 35 percent.

_ Eliminate about $41 billion in tax breaks for oil and natural gas companies. Obama has called for eliminating tax breaks for all oil and gas companies every year since he took office in 2009. The biggest is a deduction for production expenses that is available to all manufacturers. In May, the Senate rejected a smaller proposal that targeted the five biggest companies: Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.

___

Associated Press writers Jim Kuhnhenn, Andrew Taylor and Laurie Kellman contributed to this report.

By KEN THOMAS 06/26/11 07:18 AM ET AP

 

COLUMBUS, Ohio — Vice President Joe Biden said Saturday the Obama administration wouldn’t let middle class Americans “carry the whole burden” to break a deadlock over the national debt limit, warning that the Republican approach would only benefit the wealthy.

Addressing Ohio Democrats, Biden said there had been great progress in talks with Republican lawmakers on a deficit-reduction plan agreement. But he insisted that his party wouldn’t agree to cuts that would undermine the elderly and middle-class workers.

“We’re not going to let the middle class carry the whole burden. We will sacrifice. But they must be in on the deal,” Biden said in a speech at the Ohio Democratic Party’s annual dinner.

Biden led efforts on a deficit-reduction plan but Republicans pulled out of the discussions last week, prompting President Barack Obama to take control of the talks.

The sides disagree over taxes. Democrats say a deficit-reduction agreement must include tax increases or eliminate tax breaks for big companies and wealthy individuals. Republicans want huge cuts in government spending and insist on no tax increases.

On tax breaks for the wealthy, Biden used the example of hedge fund managers who “play with other people’s money.”

“And they get taxed,” Biden said. “I’m not saying they don’t do good things, they do some good things. But they get taxed at 15 percent because they call it capital gains. Because they’re investing not their money, (but) other people’s money.”

To ask senior citizens receiving Medicare to pay more in taxes when people earning more than $1 million a year receive a substantial tax cut “borders on immoral,” the vice president said.

“We’re never going to get this done, we’re never going to solve our debt problem if we ask only those who are struggling in this economy to bear the burden and let the most fortunate among us off the hook,” Biden said.

Republican leaders say without a deal cutting long-term deficits, they will not vote to increase the nation’s borrowing – which will exceed its $14.3 trillion limit on Aug. 2. The Obama administration has warned that if Congress fails to raise the debt ceiling, it would lead to the first U.S. financial default in history and roil financial markets around the globe.

Obama and Biden are scheduled to meet with Senate Majority Leader Harry Reid, D-Nev., and Senate Republican leader Mitch McConnell of Kentucky on Monday. McConnell and House Speaker John Boehner, R-Ohio, say no agreement can include tax increases.

Biden assailed moves by GOP governors in Wisconsin and Ohio to strip away collective bargaining rights from most public workers while criticizing efforts by Republicans in Congress to alter the Medicare program. He defended Obama’s handling of the economy, pointing to difficult decisions on an economic stimulus package and the rescue of U.S. automakers.

Ahead of Biden’s visit, Republicans countered that Obama’s policies led to GOP gains in 2010 and have failed to revitalize the economy.

“All the visits in the world from President Obama, Vice President Biden and other top-level surrogates won’t change the administration’s job-killing policies,” said Republican National Committee spokesman Ryan Tronovitch.

Biden, who spoke frequently of his blue-collar roots in Scranton, Pa., during the 2008 presidential race, is expected to be a frequent visitor to the Midwest during next year’s campaign.

Obama won states such as Ohio, Michigan and Pennsylvania in 2008. But those states elected Republican governors in 2010 and are considered prime targets for Republicans next year.

Looking ahead to 2012, Biden called Ohio “the state that we must win and will win.”

As reported in Huffington Post
WASHINGTON (AP/The Huffington Post) — Efforts to find a bipartisan agreement blending huge budget cuts with a must-pass measure to increase how much the government can borrow have entered a new phase after Republican negotiators pulled out of talks led by Vice President Joe Biden.

The exit of House Majority Leader Eric Cantor from the talks on Thursday means the most difficult decisions have been kicked upstairs to GOP House Speaker John Boehner of Ohio and President Barack Obama. The Biden-led group had made solid progress in weeks of negotiations but was at an impasse over taxes.

Cantor, R-Va., said that the Republican-dominated House simply won’t support tax increases and that it’s time for Obama to weigh in directly because Biden and Democrats were insisting on tax increases. Democrats said it’s only fair to blend in additional revenues from closing tax breaks to balance trillions of dollars in spending cuts.

It had long been assumed that the Biden group would set the stage for more decisive talks involving Obama and Boehner. As a result, Cantor’s move was interpreted as trying to jump-start the talks rather than blow them up – a view shared by Cantor himself.

“The purpose here is to alter the dynamic,” Cantor said.

In fact, Cantor’s withdrawal came after Boehner had already made a trek to the White House – in a secret meeting Wednesday night that followed up on a golf outing over the weekend.

According to The Hill newspaper, Cantor’s walkout had been planned for weeks:

The timing of Cantor’s exit from the talks has been discussed for weeks, and senior House Republicans cast it as a natural progression for the negotiations.

For his part, Cantor didn’t inform Boehner of his decision to leave the talks until Thursday, shortly before the news broke, said a GOP official familiar with the situation. The official required anonymity because of the sensitivity of the information.

The White House sought to put a positive spin on developments.

“As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders,” Biden said in a statement. “The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. For now the talks are in abeyance as we await that guidance.”

The Senate’s Republican negotiator, Jon Kyl of Arizona, also exited the talks.

For his part, Cantor said the secretive Biden-led talks had “established a blueprint” for agreement on significant cuts in spending.

One of the byproducts of Cantor’s departure was to provide an opportunity for partisans on all sides to make statements at odds with the positions they may have to take to achieve a deal. Democrats insist that at least some new revenues are needed – both to soften spending cuts and to line up the Democratic votes needed to pass the measure.

“It will take Democratic votes to pass any debt-ceiling agreement,” said Sen. Chuck Schumer, D-N.Y. “As a result, certain things are going to have to be true. We cannot make cuts to Medicare benefits. We have to allow for revenues like wasteful subsidies for ethanol and oil companies. And we have to do something on jobs.”

“President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit,” said Senate Republican leader Mitch McConnell, R-Ky. “He can’t have both.”

As for Democratic demands for new deficit-financed “jobs” initiatives, McConnell scoffed: “What planet are they on?”

Cantor said that plenty of progress has been made in identifying trillions of dollars in potential spending cuts to accompany legislation to raise the $14.3 trillion cap on the government’s ability to borrow money. Passage of the legislation this summer is necessary to meet the government’s obligations to holders of U.S. Treasurys. The alternative is a market-shaking, first-ever default on U.S. obligations.