Pelosi: Any Deal Must Increase Tax Rates; Majority of House Has Pledged Not To

By Terence P. Jeffrey | November 18, 2012 | 2:16 PM EST

(AP Photo)

( - House Minority Leader Nancy Pelosi (D.-Calif.) said on ABC’s “This Week” on Sunday that there can be no deal to avert the so-called “fiscal cliff” the federal government faces at the end of the year unless congressional Republicans agree to increase income-tax rates on higher income earners.

However, a majority of the current House of Representatives and a majority of the newly elected House that will convene in January have pledged to the American people that they will not raise the tax rates.

ABC’s Martha Raddatz asked Pelosi: “Could you accept a deal that does not include tax rate increases for the wealthy? We have seen talk about a possible compromise that would leave rates the same, but cap deductions for high-income earners. Is that something that's acceptable?

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“No,” said Pelosi.

Asked Raddatz: “Not at all? No way?”

“Well, no,” said Pelosi.

“What you just described is a formula and a blueprint for hampering our future,” Pelosi said a moment later. “You cannot go forward, you have to cut some investments. If you cut too many, you're hampering growth, you're hampering education, our investments for the future.

“So just to close loopholes is far too little money,” said Pelosi. “If it's, and it could be, they have said they want it to be revenue-neutral. If it's going to bring in revenue, the president has been very clear that the higher-income people have to pay their fair share.”

In the “lame duck” 112th Congress, which will serve through the end of the year, 238 House members took the Americans for Tax Reform (ATR) pledge, in which they pledged to the taxpayers of their state and the American people generally that they would oppose any and all efforts to increase marginal tax rates.

Since the House has 435 members—with 218 being a majority—some members who took the pledge would need to break it for a tax increase to be enacted.

In the 113th Congress, whose House members were all elected on Nov. 6, 219 House members have taken the ATR pledge. That is still a majority of the House, meaning after the New Year, some House members would need to break their no-tax increase pledge for a tax increase to be enacted.

The pledge that the House members took says: “I, [name of candidate], pledge to the taxpayers of the state of [name of state], and to the American people that I will: One, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.”

House Speaker John Boehner took this pledge.

At the end of this year, the lower marginal tax rates enacted during President George W. Bush’s first-term are set to expire. If they are not renewed, income tax rates will go up. Also, the deal that President Barack Obama and Speaker Boehner made in August 2011 to increase the federal government’s debt limit by $2.4 trillion included a provision that would require automatic spending cuts to kick in after the first of the year if Congress and the president do not agree to a package of spending cuts.

According to the Congressional Research Service, the automatic spending cuts in 2013 would include about $54.7 billion in defense spending and $54.7 billion in discretionary domestic spending.

Also, the Treasury Department has indicated that it believes the $2.4 trillion increase in the debt limit approved in the Boehner-Obama deal of August 2011 will be exhausted about at the end of the year. For the federal government to continue deficit spending, Congress and the president must again agree to lift the limit on the debt.

The federal government spent $3.795 trillion in fiscal 2012 and ran a deficit of more than $1.2 trillion for the fourth straight year, according to the Office of Management and Budget.

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