As reported in Huffington Post 11/4/11

 

WASHINGTON — House Speaker John Boehner said Thursday that any bipartisan agreement reached by the congressional deficit-reduction supercommittee will need to include some new tax revenue.

Most Congressional Republicans have signed a “taxpayer protection pledge” — devised by the Grover Norquist-led group Americans for Tax Reform — vowing not to raise taxes. When asked about Norquist on Thursday, Boehner dismissed him as “some random person in America” but later revised his comments to say that “Norquist, like millions of Americans, believes that raising taxes is not good for our economy.”

According to CBS News, Boehner insisted that Republicans would only compromise on tax revenue if Democrats were willing to take significant steps to shore up entitlement programs.

“Without real reform on the entitlement side, I’m not even going to put any new revenue on the table,” Boehner said. Entitlement programs include Social Security, Medicare and Medicaid.

Any new tax revenue would not come from raising rates, he said, but from overhauling the tax code, sweeping out loopholes and deductions in order to reduce individual and corporate rates.

“I do think that our efforts to have a flatter, fairer tax system, with our targets being 25 percent top rates for corporations, 25 percent top rates for individuals, is achievable,” Boehner said. “That means you clean out all the garbage. I think it’s very important that it get done.”

Boehner says he remains committed to helping the deficit panel succeed and that Congress should approve its recommendations if it produces a plan to curb the government’s gush of red ink. He expressed confidence on Thursday that the group would meet its goal.

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“I didn’t agree to set this thing up with any idea that it wouldn’t succeed,” Boehner said. “I’d love to exceed the goal, but we have to meet the goal, and I’m going to put every ounce of effort in to make sure that we do.”

Shortly after meeting with reporters, Boehner met again with supercommittee Republicans.

The panel has three weeks to come up with recommendations that would be given an automatic vote by both House and Senate.

The deficit panel appears deadlocked over demands by Democrats that it raise substantial new revenue. Republicans are united against the idea, though a GOP proposal last week counted new Medicare premiums and larger contributions from federal workers to their retirement as revenue. Republicans also assumed about $200 billion in revenue would come from the economic growth associated with reforming the loophole-cluttered tax code.

In a surprise development, the three GOP senators in the so-called Gang of Six group that forged a bipartisan deficit proposal including about $2 trillion in new revenues signed on to a letter drafted by conservative stalwart Jim DeMint, R-S.C., that called on the supercommittee to propose a solution with “no net tax increase.”

Boehner discussed a potential deficit deal with President Barack Obama this summer that would have allowed up to $800 billion in new revenues as part of a comprehensive tax overhaul bill that would have eliminated many tax breaks and used the savings to lower income tax rates.

However, the Boehner-Obama talks fell apart.

Boehner said Thursday that “all kinds of discussions” are going on now.

“I think there’s room for revenue but there’s clearly a limit to the revenues that may be available,” Boehner said.

JEANNINE AVERSA | 12/22/10 11:23 AM | AP

WASHINGTON — Expectations for economic growth next year are turning more optimistic now that Americans will have a little more cash in their pockets.

A cut in workers’ Social Security taxes and rising consumer spending have led economists to predict a strong start for 2011.

Still, most people won’t feel much better until employers ramp up hiring and people buy more homes.

Analysts are predicting economic growth next year will come in next year close to 4 percent. It would mark an improvement from the 2.8 percent growth expected for this year and would be the strongest showing since 2000.

“Looking ahead, circumstances are ripe for the economy to develop additional traction,” said Joshua Shapiro, chief U.S. economist at MFR Inc. in New York. He is estimating growth for 2011 to be above 3.5 percent.

The economy grew at a moderate pace last summer, reflecting stronger spending by businesses to replenish stockpiles, the Commerce Department reported Wednesday. Gross domestic product increased at a 2.6 percent annual rate in the July-September quarter. That’s up from the 2.5 percent pace estimated a month ago. While businesses spent more to build inventories, consumers spent a bit less.

Many analysts predict the economy strengthened in the October-December quarter. They think the economy is growing at a 3.5 percent pace or better mainly because consumers are spending more freely again.

Still, the housing market remains a drag on the slowly improving economy.

The National Association of Realtors reported Wednesday that more people bought previously owned homes rose in November. The sales pace rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million units. Even with the gain, sales are still well below what analysts consider a healthy pace.

Even if analysts are right about 2011 being a better year for the economy, growth still wouldn’t be strong enough to dramatically lower the 9.8 percent unemployment rate.

By some estimates, the economy would need to grow by 5 percent for a full year to push down the unemployment rate by a full percentage point. Even with growth at around 4 percent, as many analysts predict, the unemployment rate is still expected to hover around 9 percent.

The third-quarter’s performance marks an improvement from the feeble 1.7 percent growth logged in the April-June quarter. The economy’s growth slowed sharply then. Fears about the European debt crisis roiled Wall Street and prompted businesses to limit their spending.

“It sure looks like the `soft patch’ is over,” said Nariman Behravesh, chief economist at IHS Global Insight.

In the third quarter, greater spending by businesses on replenishing their stocks was the main factor behind the slight upward revision to GDP.

Consumers boosted their spending at a 2.4 percent pace. That was down from a 2.8 percent growth rate previously estimated. Even so, consumers increased their spending at the fastest pace in four years. The slight downward revision reflected less spending on health care and financial services than previously estimated.

More recent reports from retailers, however, show that shoppers are spending at a greater rate in the final months of the year.

Companies are discounting merchandise to lure shoppers. A price gauge tied to the GDP report showed that prices – excluding food and energy – rose at a 0.5 percent pace in the third quarter, the slowest quarterly pace on records going back to 1959.

Americans have more reasons to be confident. Stock prices are rising, helping Americans regain vast losses in wealth suffered during the recession. Job insecurity remains a problem, but the hiring market is slowly improving. And loans aren’t as difficult to obtain for those with solid credit histories.

Even with the improvements, though, consumers are showing some restraint. In the past, lavish spending by consumers propelled the economy to grow at a rapid pace. After the 1981-1982 recession, the economy expanded at a 9.3 percent clip. Consumers increased their spending at an 8.2 percent pace.

Consumers have yet to display that level of confidence in the economy. While hiring is improving, employers still aren’t adding enough jobs to lower the unemployment rate.

Even with stronger economic growth anticipated for next year, analysts predict it will still take until near the end of this decade to drop unemployment back down to a more normal 5.5 percent to 6 percent level.

The government’s estimate of GDP in the July-September quarter was its third and final one. The government makes a total of three estimates for any given quarter. Each new reading is based on more complete information. GDP measures the value of all goods and services – from machinery to manicures – produced within the United States.