What Minnesota’s Democrats want in a 'fiscal-cliff' deal
WASHINGTON — Only a few high-level congressional leaders are involved in negotiations with the White House over an end-of-the-year deal to prevent the so-called “fiscal cliff.”
That leaves hundreds of lawmakers sitting on Capitol Hill holding out for an agreement palatable to their ideologies — and trying as hard as they can to influence the behind-the-scenes deficit reduction debates that are dominating the lame duck session of Congress.
MinnPost sat down with almost every member of the Minnesota congressional delegation last week to find out what they hope to see in a final fiscal cliff deal. Tomorrow, we’ll talk to the state’s Republicans, but today, here are the delegation’s Democrats, and excerpts of their thoughts on entitlement spending, taxation policy, and whether it would actually be such a bad thing to “go over” the fiscal cliff.
(Note: Rep. Betty McCollum declined an interview)
Much of the current debate about the fiscal cliff has focused on increasing taxes, but Republicans say a second component has to be entitlement reform — a topic that has Democrats divided between liberals (like Keith Ellison and Al Franken), who are resistant, in varying degrees, to the cuts and those (like Tim Walz and Collin Peterson) willing to cut a deal.
Rep. Keith Ellison: What I’m opposed to is requiring the most vulnerable people in our community — seniors, the aged, people who are sick and really can’t work — I don’t think they should have to pay for the fiscal problems of our society. They didn’t cause them, and they shouldn’t have to bear the brunt. No, I’m not going to ask families who depend upon Medicaid to send their family member into a nursing home, or worse, so that somebody else can preserve their tax cut.
Sen. Al Franken: I would say Social Security is off the table in terms of deficit talks because Social Security is not contributing to the deficits. … I would say that we expanded the solvency of Medicare by eight years [through the Affordable Care Act] and in addition to that we increased benefits to people on Medicare. … I’m really saying, we’ve done it, we did it, it wasn’t sort of acknowledged and I’d like it to be acknowledged that we did it.
Sen. Amy Klobuchar: I would envision [Social Security] to run on a separate track … but I haven’t heard many people say that any reforms would do anything except money that would go back into Social Security to keep it solvent. … My prediction, again, is that [Medicare] would be part of a more comprehensive agreement that could be into next year. The most important thing is that everyone should be taking this opportunity to lay their plans out on the table before drawing lines in the sand.
Rep. Tim Walz: But I do think [entitlement spending] needs to be a big component of it. I think the president, obviously, has set out a bigger revenue component than this, and we’ll reach somewhere in there, but I’m still convinced with the “go big” approach, and now there is leverage there to do it.
Rep. Collin Peterson: I told my constituents during the election: I can’t tell you what this is going to look like. All I can tell you is this: you’re all going to pay more, and you’re all going to get less. And that’s what’s going to happen at some point, maybe before Christmas, maybe next year, whenever it is, but at the end of the day, nobody is going to be exempt. We’re going to have to fix this.
There does seem to be one entitlement reform most Democrats can agree on:
Ellison: One reform I would accept is to allow Medicare Part D to negotiate for drug prices like the VA does now.
Klobuchar: Negotiation of prices under Medicare Part D is something that would be really important to include here that hasn’t been talked about.
Walz: When I said entitlement reforms, too, I think we need to look at letting Medicare negotiate. That’s $240 billion over 10 years. That’s one of the biggest savings you can get. It’s double what you could get out of raising the retirement age.
In terms of other spending cuts, the lawmakers have a litany of potential targets, though defense is at the top of the list.
Ellison: I think in military procurement there are a lot of savings to be had … I think we also need to retire some Cold War weapons systems that are very expensive, we don’t need those. I think there is a number of savings to be had.
Franken: Let’s make smart, targeted cuts. We can make cuts in defense, not to the extent the sequester does. … There are savings there that have actually been identified by the Joint Chiefs, by [Robert] Gates, by [Leon] Panetta, not to the extent the sequester has it, but I think we can make significant savings in defense.
Klobuchar: Our own military commanders have suggested some of the things that can be done, like the F-22 Raptor program, the F-35 Alternate Engine Program. … There are cuts to me made here, and we can do it without doing it on the backs of the middle class.
I think the other thing most people don’t talk about is the farm bill. That’s a $23 billion reduction over the last farm bill over 10 years [in the Senate version].
Peterson: There is some talk about [the farm bill], but I’m not sure it’s going to be enough money that anybody really cares enough about it.
The Democrats present a united front on taxes — every Democrat in the Minnesota delegation supports Obama’s plan to let the Bush-era tax cuts lapse on income over $250,000.
Walz: I certainly always believe in a progressive tax code. That you’re going to pay a little bit more at the top, for one thing is, not just because you have the ability, but in many cases you benefit more from it.
Ellison: The reality is, is that we’ve seen three decades of this country thinking that if we cut taxes for the richest people, then they would use the extra money to invest [in the economy]. This has never worked. It’s time to stop that.
Peterson: I’m not against it, but that may not be enough. I don’t know that you get there by only raising rates on the wealthy.
Klobuchar: I personally believe the focus at the end of the year will be: How we do the cuts … and the second part is those Bush tax cuts.
They’re also looking to find savings in the tax code, should Republicans open the door to more revenue through tax reform.
Walz: One thing that I wanted to pass and one that I would argue is something we could agree on is mortgage interest deduction on yachts. … That’s silly, because I think that all of us know the argument that people will not buy a yacht because they don’t get the mortgage interest deduction is ludicrous.
Ellison: I think if we want to make sure that retailers like Best Buy can stay competitive, we might want to look at some kind of online sales tax. … [And a] financial transaction tax … $50 on $10,000 worth of stock trades.
Franken: I could see, again, doing stuff on dividends, on capital gains. You saw [Mitt] Romney make $20-some million last year and paid 14 percent on it. I think something like the Buffett Rule, where if you make over $1 million you have to pay a certain percentage of your net income in taxes.
Klobuchar: One example would be the oil subsidy, which is $40 billion over 10 years. … I’ve talked about how you can cap the home mortgage deduction at a $500,000 value on a home.
A small group of liberal lawmakers told Politico that Democrats might gain leverage over tax-resistant Republicans by going “over the cliff” if no deal is reached this year. That feeling is, largely, not shared by members of the Minnesota delegation.
Walz: I don’t take a “my way or the highway” approach to this. I understand there’s tough decisions for my Republican colleagues to make here. I understand that they have philosophical ideas, but I think it’s also important to understand that the checks and balances of divided government can be healthy. I kind of think the “let’s take us over the edge” approach is what my Republican friends did during the debt ceiling debate. I disagreed then, and I disagree now.
Ellison: We should do everything we can to avoid going past the deadline of Dec. 31 without a deal. We need to do it because we need to lend predictability to the markets, and we need to lend predictability to household budgets. But I’m not going to sacrifice the most vulnerable and the aged just to get some deal.
Franken: I would prefer that we give some kind of certainty to people and to the markets. That’s why I pushed to, and why we passed in the Senate, the extension of the Bush tax cuts on the first $250,000. So let’s take care of that, let’s make sure that we’re not going to have a fiscal cliff.
Klobuchar: I think we’d like to avoid that. I think the American people spoke loud and clear: They want us to come together toward a solution that balances cuts and revenues.
Peterson: I’m concerned about that because of the effect it would have on the markets. I don’t think we should be promoting that. … This is going to come down to whether Boehner and Obama can make a deal that they can sell. That’s the bottom line.
Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry
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Comments (5)
The sham
in this whole raise the tax rates on the wealthy issue is
1- It provides no where near enough money to even make a small dent in the deficit
and
2 - it will still leave guys like Warren Buffet paying far lower tax rate than a guy like me (owner of a small business with 70 employees). Buffets income is derived almost exclusively from capital gains and other investment income - mine almost exclusively from operating a manufacturing business. His effective tax rate will not change, mine goes up.
So, with employees looking for raises, my fed taxes going up (we are a sub chapter S corp so the business taxes = my taxes), my state taxes going up, my property taxes going up, uncertainty over my medical insurance plan, and a business forecast that looks pretty hazy (in no small part due to all the uncertainty over the tax and healthcare issues), just exactly what I am suppose to do?
Raise prices? That will just move more manufacturing work to China. Cut staff? I resisted that during the recession choosing to cut pay for myself (and other senior managers) rather than let people go. Gain efficiencies? We have been doing that forever and there is not a whole lot of fruit left on that tree.
There are real tax reform ideas out there. Ralph Nader's proposal for a .25% transaction fee on all financial trades is a very sound one. Think about this. The current value of all the financial trade transaction in a year are 70 times the actual size of the economy. Taking 25¢ out of a $100 trade yields billions of dollars in new revenue.
There are a variety of proposals on consumption taxes that make great sense. And there is the 4000 pages of special interest tax breaks written in the current tax code that should be pruned by, in my opinion, 3000+ pages.
But none of that sells. The wealthy liberals supporting Obama and friends would feel those tax increase just as the conservative friends of the Republican party. So it is not going to happen.
No, just much easier to say "tax the wealthy" without really defining who that is, what effect it will ultimately have and, most importantly, acknowledging that it's insufficient to make a real difference.
Makes me wonder if I should sell my business and become a day trader. I would personally be a lot better off and would certainly pay a whole less in taxes. Of course 70 people would lose their jobs - jobs that pay well and have great benefits. But I am starting to think that is what the politicians are providing incentives for me to do.
My redline
Any cuts to social security ...even slight of hand such as changing age of qualification and I will NEVER contribute to the Democratic party or any democrat candidate....even Ellison( the best thing congress has going for it)!
More proof
that people just don't understand the real issue. Quote from the NY Times:
“We have the greatest disproportion of wealth since 1928, and I don’t think that’s a healthy thing,” William L. Enyart (recently elected Dem to the US House) said. “How much money is enough? Do hedge fund traders really need to make a billion dollars a year and pay only 15 percent in taxes when we have teachers making $50,000 and paying 20 percent?”
Rep Enyart - I hate to tell you this but Mr. Obama's plan (and Mr. Dayton's plan) will NOT address the issue you are complaining about. Obama/Dayton want to raise the taxes on earned income - not capital gains taxes from hedge fund managers. Hedge fund managers are not going to pay 1¢ more unless you count that income as earned rather than capital gains.
But the rhetoric sounds good......
Can you cite a source?
The expiration of the Bush tax cuts should raise capital gains from 15% rate back to a 20% rate. The provisions on taxing dividends as gains instead of income would also expire. NPR says that setting the rates back to 20% is part of the Obama plan.
http://www.npr.org/blogs/itsallpolitics/2012/11/29/166150808/why-dividen...
The best statemnt in the lot
"All I can tell you is this: you’re all going to pay more, and you’re all going to get less. And that’s what’s going to happen at some point"
Basically everyone contributed to or benefited from the deficit, they should now start paying it off in proportion to their gain.
Statistically speaking, (rich is anyone above mean income ~ $50K), Since the 1% or the ~ 6th Std. deviation benefited by far the most they should help the most.
Yes representative Ellison, the poor etc benefited as well, and need to contribute their fair share, "No sacred cows"