By Kathleen Hunter
The odds are good that Congress and President Barack Obama will reach a deficit-reduction deal by the end of the year if Republicans agree to increase tax rates for top earners, Maryland Representative Chris Van Hollen said.
“I think it’s better than 50 percent that we are able to get an agreement before Jan. 1,” Van Hollen, the top Democrat on the Budget Committee, said today at a Bloomberg Government panel in Washington.
Van Hollen said his confidence presumes that Republicans will capitulate to allowing the top tax rate to rise above the current 35 percent, which House Speaker John Boehner and other Republican leaders have opposed.
“If that doesn’t come true, it’s less than 50 percent,” Van Hollen said. Congress and the president are trying to avert more than $600 billion in tax increases and spending cuts set to start in January.
Speaking at today’s panel, Senator Mark Warner, a Virginia Democrat, Senator Bob Corker, a Tennessee Republican, and former Minnesota Governor Tim Pawlenty, a Republican, said they too think a budget deal will be reached this month.
Unless Congress acts, taxes on income, capital gains, dividends and estates will rise and automatic federal spending cuts, known as sequestration, will begin in January.
“I think it’s 80 percent-plus that we will avoid sequestration,” said Warner, a member of a bipartisan group of senators who had been trying independently of leadership to craft a broad deficit-reduction plan.
Tax Focus
Corker and Pawlenty said Obama has focused too much on taxes and that to reach a deal, greater emphasis must be given to finding savings in entitlement programs. Unlike the question of raising rates for top earners, on which most Democrats agree, congressional Democrats are divided over what changes to entitlement programs they could accept.
“You basically have a president, let’s face it, that not to be too pejorative, that’s been a one-trick pony,” Corker said. “The rate is all he’s been talking about.”
Pawlenty, president of the Financial Services Roundtable, said the two sides must discuss “what can you live with, what is your red line and is there some overlap between those two things” to put a deal together.
“You can’t push people to a place where they can’t go, and leaders in negotiations have to understand that and communicate and figure out where the common space is,” Pawlenty said. “You can’t corner people with no way out because then you’ll have a failure.”
Corker said he hoped that “instead of spiking the ball” and letting the tax cuts expire, Obama would work personally with Boehner to hammer out an agreement.
‘Sit Down’
“I hope they’ll sit down and mesh something together that Republicans could be OK with, that generates the kind of revenues that we need but also the kind of entitlement reforms,” he said.
Representative Tom Cole, an Oklahoma Republican who told his colleagues privately last week that their negotiating position would be improved by agreeing to raise rates for top earners, told reporters yesterday that Boehner would have to get most House Republicans on board for any plan he’d agree to with Obama.
“That is just politics 101,” Cole said. “When you are cutting a deal with the opposite party they’ve got, politically, to be able to sell this deal to the majority of their members. ”
‘Comprehensive Solution’
Representative Dave Camp, chairman of the tax-writing Ways and Means Committee, said Republican leadership is working on a “comprehensive solution” to avert a possible fiscal crisis rather than focusing on extending tax cuts for all except the top earners.
“At this point it’s still how do we get to a comprehensive solution,” Camp, a Michigan Republican, told reporters. “Obviously you have to think about all the options potentially. I think people are thinking about it, but I think we want to see if we can get a comprehensive answer at this point.”
Senate Majority Leader Harry Reid today again called on Boehner to schedule a vote on a Senate-passed tax-cut bill. He said every Democrat in the House would support the one-year extension of expiring tax cuts for income of individuals up to $200,000 a year and married couples up to $250,000.
“You have the ability and you’re the only one who has the ability to put this on the floor for a vote,” Reid, a Nevada Democrat, said on the Senate floor. It would take 26 “reasonable Republicans” in the House to pass the bill, he added.
Business Owners
House Republican leaders are meeting today with a group of small business owners who Republicans say would face higher taxes under Obama’s proposal.
Meanwhile, members of AARP, which represents more than 37 million senior citizens, fanned out across Capitol Hill today to lobby lawmakers against any deal that cuts Medicare and Medicaid benefits. In particular, they oppose any effort to raise the Medicare eligibility age and change the way Social Security cost-of-living payments are calculated. Both of these concepts were part of failed talks between Boehner and Obama last year on a deficit-reduction agreement.