Obama's Solution To Budget Problem May Involve Tax Hike For Some
The Associated Press reported:
It comes in the scramble to heed what is widely viewed as a loud clamor from voters to slam the brakes on runaway government spending. There has been no corresponding public demand for raising taxes. That's not surprising, but the top-bracket U.S. tax rate now is the lowest it's been in decades, and it's far lower than those in many other industrialized countries, especially in western Europe.
Tax elements of Obama's broad deficit-reduction plan, to be laid out in a speech Wednesday, seem likely to revive his earlier proposals.
The president is expected to bring back his recommendation, first made in the 2008 campaign, to end Bush-era tax cuts for households earning over $250,000 a year. He temporarily set it aside when he signed onto a late 2010 agreement with Republicans to extend all Bush tax cuts for two years.
It is also expected Obama will call for changes to be made the tax code, which he contends generally benefit the wealthy.
Republicans, however, are far from enthusiastic about raising taxes, though House Speaker John Boehner seemed to consider the idea before last week's budget deal that averted a government shutdown.
When asked last week about the possibility of a tax increase to deal with the ballooning budget deficit, Boehner told ABC News' George Stephanopoulos , " “I’ll put everything on the table.”
“I think Washington has a spending problem,” Boehner said. “I don’t think it has a revenue problem. I’m not interested in raising taxes on the American people. But if— if it— if it takes leaving it on the table to have the conversation, I’ll have the conversation. It’s time to deal with these challenges.”
However, Boehner has since backed off that statement, calling the issue "a nonstarted" on Tuesday. "Tax increases are unacceptable," he said.
Senate Minority Leader Mitch McConnell echoed Boehner's most recent position on taxes. On Tuesday, McConnell said he doesn't think generating more revenue will solve the problem. "From my point of view, taxes are not on the table because we don't have a revenue problem, we have a spending problem," he said.
Democrats aren't necessarily keen on the idea either, particularly with an election right around the corner. Though Senate Majority leader Harry Reid said getting additional revenue for the government needs to be part of the solution.
CNN reported that Reid: "didn't give specifics, but Democrats generally favor increasing the tax rate for families earning more than $250,000 a year to the levels of the 1990s, before tax cuts implemented by the Bush administration."
In addition to the budget, Congress must also come to an agreement on the debt ceiling level. Legally, the government cannot borrow more than $14.29 trillion. According to McConnell, the Treasury Department says it expects the government will reach that level "between Memorial Day and the Fourth of July."