Boehner: Obama to Blame if Largest Tax Increase Happens

Wednesday, 19 Dec 2012 03:01 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
House Speaker John Boehner said President Barack Obama will be responsible for “the largest tax increase in American history” if Democrats don’t accept a tax measure the House plans to pass Thursday.

“The president will have a decision to make,” Boehner said, after the House passes the speaker’s plan to extend tax cuts for all household income below $1 million a year. “He can call on Senate Democrats to pass that bill or he can be responsible for the largest tax increase in American history.”

Earlier, Obama said he offered congressional Republicans a “fair deal” and accused them of “posturing” in the talks.

“I have gone at least halfway” and Republicans need to “take the deal” he’s offered, the president said Wednesday at the White House. “I’d like to get it done before Christmas.”

Unless Congress acts, more than $600 billion in tax increases and spending cuts will begin next month. Boehner is looking to pressure Obama to accept deeper spending cuts and a higher threshold for rate increases by showing how tough it will be to win Republican support for any tax increase.

Boehner took no questions from reporters after making his statement.

Obama said his plan is “as large a piece of deficit reduction as we’ve seen in 20 years” and would stabilize the federal debt for a decade. He said the proposals he and House Speaker John Boehner have advanced are “pretty close.”

Obama Veto

Obama spokesman Dan Pfeiffer said the president would veto Boehner’s tax proposal in the “unlikely event” Congress passed it.

“Millionaires would see a tax break of $50,000, while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on,” Pfeiffer said in a statement. The plan would “deeply” cut Medicare, he said, adding that the president would veto it “in the unlikely event” the measure passed Congress.

Boehner’s “Plan B” would raise tax rates on annual income exceeding $1 million, rather than the $400,000 threshold the president proposed in his latest offer. It would be “dead on arrival in the Senate,” said Democratic Senator Chuck Schumer of New York.

No talks have occurred between the White House and congressional Republicans since Boehner and Obama met Dec. 17, administration officials said in a background briefing for reporters.

‘Bizarre and Irrational’

Brendan Buck, a Boehner spokesman, said the White House’s opposition to Boehner’s plan “is growing more bizarre and irrational by the day.” In an e-mailed statement, Buck said if Democrats “disapprove of this bill, then there is a simple solution: Amend it in the Senate and send it back to the House.”

Putting Republicans on record in support of a higher rate for some top earners might insulate Boehner and his party from blame if no deal is reached and taxes rise starting Jan. 1 as part of the so-called fiscal cliff.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Wednesday that Obama has squandered the chance to craft a broader solution with Republicans.

“Speaker Boehner, like me, would like to prevent a tax hike on everyone,” McConnell said on the Senate floor. “But given the president’s failure to act, the House will soon vote on legislation to prevent a tax hike on anyone making less than a million dollars a year, rather than letting taxes go up on every American taxpayer.”

Debt Limit

Obama also said today he won’t negotiate on whether to raise the federal debt limit, which the U.S. is projected to reach as early as mid-February.

“I’ve put forward a very clear principle: I will not negotiate around the debt ceiling,” he said. “We’re not going to play the same game that we saw happen” in 2011. That debate, resulting in a credit downgrade, “hurt our economy” and “provided more uncertainty,” he said.

Even so, Obama’s latest offer to Boehner of a two-year extension as part of a broader deal signaled he was willing to negotiate on the issue.

Administration officials said Boehner’s plan has made it tougher to work out a deal before January. They said most Republicans haven’t voted for tax increases in about 20 years and Boehner will have to push to get support from his own party.

Also, the anti-tax group Americans for Tax Reform said Boehner’s proposal to let tax cuts expire for income exceeding $1 million doesn’t break the anti-tax pledge most Republicans have taken. The group is led by Grover Norquist, author of the pledge.

‘Sole Purpose’

Republicans say the bill’s “sole purpose” is to prevent tax increases, the group said. “It is extremely difficult — if not impossible — to fault these Republicans’ assertion.”

Two small-government groups, the Heritage Foundation and the Club for Growth, urged lawmakers to vote “no.”

The administration maintains that Boehner’s plan would hurt the middle class by letting three tax credits expire that began in the 2009 stimulus law. They benefit low-income households, families with children and college students. The administration says setting the tax increase threshold at $1 million would let people see lower rates on their first $1 million of income.

Boehner’s plan “keeps tax cuts for folks making $500,000 or $700,000 or $800,000 or $900,000 a year and gives more tax breaks to millionaires and billionaires,” Obama said.

Additional Taxes

Many households making more than $1 million a year wouldn’t pay additional taxes. Those making between $1 million and $1.5 million in 2009 had an average of $167,454 in itemized deductions, according to the Internal Revenue Service. People can use tax breaks to go below $1 million in taxable income.

Based on studies of previous proposals, Boehner’s bill would raise between $300 billion and $400 billion over the next decade.

The plan would set tax rates for capital gains and dividends at 20 percent on income higher than $1 million. A tax already set to take effect in 2013 would push the total top rate on investments to 23.8 percent. The bill would continue current estate-tax rules that set the per-person exemption at $5.12 million, indexed for inflation, with a top rate of 35 percent.

Getting the votes to pass Boehner’s proposal in the Republican-led House won’t be easy. For years, most Republican lawmakers have opposed any tax increases. Democrats have said they will oppose the Boehner measure, dismissing it as a political ploy that falls short of generating enough revenue.

Political Cover

A vote on Boehner’s proposal also could provide him with political cover within his caucus to eventually back a revised agreement with Obama that would require more Democratic votes.

Some lawmakers expressed concern over having a separate vote, as House leaders are considering, on extending tax cuts for those earning under $250,000 a year, Representative Mike Coffman, a Colorado Republican, said in an interview.

Obama’s original negotiating position called for a tax-cut extension to apply below the $250,000 mark.

Fifty-three percent of Americans say the country will experience major economic problems if no deal is reached, according to a CBS News poll conducted Dec. 12-16. The poll showed that 47 percent blame Republicans in Congress for gridlock, compared with 24 percent who put the onus on Obama and other Democrats.

The survey of 1,179 adults had a margin of error of plus- or-minus three percentage points.

Paycheck Withholding

The American Payroll Association asked the Treasury Department in a Dec. 17 letter to freeze paycheck withholding at 2012 levels while Congress continues to debate the 2013 rates. Treasury, which has the authority to set tables, hasn’t responded, the group said.

The Standard & Poor’s 500 Index lost 0.2 percent to 1,443.58 at 1:34 p.m. in New York. The benchmark index has gained 15 percent so far this year. The Dow Jones Industrial Average slipped 12.01 points, or 0.1 percent, to 13,338.95. The benchmark 10-year Treasury bond yield fell two basis points, or 0.02 percentage point, to 1.79 percent at 1:08 p.m. New York time after touching 1.8 percent earlier, according to Bloomberg Bond Trader prices.

© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved