White House: Closing Some Loopholes Not ‘Politically Feasible’
(CNSNews.com) — The White House stood firm Thursday insisting on raising tax rates, and that closing loopholes would not produce enough revenue as lawmakers seek to avoid the fiscal cliff.
“Well if you look at his plan and the revenue section in it, you’ll notice that we talk a lot about rates,” White House Press Secretary Jay Carney said. “One of the points I have been making and others have been making is that you can’t get the kind of revenue you need simply by closing deductions without taxing the heck out of the middle class or without ending the charitable deduction and other things that would never fly with Capitol Hill for good economic as well as political reasons.”
Democrats seek to raise tax rates on high-income earners, while Republicans insist closing tax loopholes can produce the needed revenue along with cuts, to address the budget problems.
Carney added that returning to the Clinton-era tax rates for households earning more than
$250,000 and individuals earning $200,000 produced a strong economy in the 1990s, when the rates were decried by Republicans in Congress.
“One of the problems with the suggestions that you can achieve substantial revenues without touching rates is that you would have to do draconian things when it comes to deductions and loopholes that aren’t economically wise or politically feasible,” Carney said.
“That’s why the president has taken the approach that he has, which includes allowing the rates to rise for top earners but also includes changes to our tax code deductions and loopholes that are plausible as well as revenue producing,” he said.
President Barack Obama is negotiating with Congress on how to avoid the so-called fiscal cliff, which are tax increases and spending reductions that will automatically take place at the end of the year unless an agreement is reached. The fiscal cliff is the result of the failure of the bipartisan super committee to reach a solution to the budgetary problems.
House Speaker John Boehner (R-Ohio) criticized the White House and Democrats for failing to agree to substantive spending cuts.
“I remain hopeful that productive conversations can be had in the days ahead, but the White House has to get serious,” Boehner told reporters Thursday. “Yesterday, our leadership team met with Erskine Bowles and business leaders about averting the fiscal cliff and achieving the ‘balanced’ approach the White House says it wants, and I’ve made clear that we’ve put real concessions on the line by putting revenues on the table right up front.
“Unfortunately, many Democrats continue to rule out sensible spending cuts that must be part of any significant agreement that will reduce our deficit. And Mr. Bowles himself said yesterday there’s been no serious discussion of spending cuts so far – and unless there is, there’s a real danger of going off the fiscal cliff,” Boehner added.
Senate Minority Leader Mitch McConnell (R-Ky.) had similar complaints about Democrats and the president.
“So if it’s an iron law of economics that you get less of what you tax, why on earth would we want to raise taxes on work? Rates matter because they affect behavior,” McConnell said. “The higher the tax rate, the higher the disincentive to work. This isn’t just Republican orthodoxy. It’s basic economics.”