Deficit Negotiations Scaled Back After Boehner Balks At Revenue Increases

It looks like even after being offered some kind of grand bargain by the Obama administration on deficit reduction, Speaker of the House John Boehner has rejected the offer because it included revenue increases. Deficit Talks Scaled Back Over Tax
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It looks like even after being offered some kind of grand bargain by the Obama administration on deficit reduction, Speaker of the House John Boehner has rejected the offer because it included revenue increases.

Deficit Talks Scaled Back Over Tax Increases:

Citing differences over tax revenues, House Speaker John A. Boehner said on Saturday night that he would pull back from joint efforts with President Obama to reach a sweeping $4 trillion deficit-reduction plan tied to a proposal to increase the federal debt limit.

On the eve of a second round of high-level bipartisan talks set for Sunday, Mr. Boehner issued a statement saying he would now urge negotiators to instead focus on crafting a smaller package more in line with the $2 trillion to $3 trillion in spending cuts and revenue increases negotiated earlier by Vice President Joseph R. Biden Jr.

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes,” Mr. Boehner said. “I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.”

Here's more from Dave Dayden -- Boehner Bugs Out of Grand Bargain, Says Medium-Level Deal Only Option:

The day that the grand bargain proposal was released, to great fanfare, on Thursday, I was immediately skeptical because I didn’t see anything in the stories suggesting that Republicans were at all willing to swallow $1 trillion in tax increases. Indeed, they never moved on revenue. And as the President was demanding an actual grand bargain, with revenues in the deal, as part of a deal that would have cut entitlements, Republicans couldn’t stomach it.

Where do we go from here? Boehner suggested the smaller deal that was part of the Biden talks. But this was the deal that Republicans essentially rejected a couple weeks ago, which had nearly $2 trillion in spending cuts and around $400 billion in revenue. I don’t know how they would go back to this at this point, but it’s possible that a patch to the alternative minimum tax, a perennial Washington favorite, would be included in the deal, to cover the revenue and allow Republicans to say that the package is revenue-neutral. It would merely mean that the AMT, which is patched every year so it doesn’t hit the middle class, would actually be paid for this time around. But it would be a net $0 in revenue from the baseline.

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The President is certainly laying it on thick here in a push for a grand bargain. But Boehner has spoken, and gridlock and militant anti-tax ideology has, in all likelihood, saved the welfare state for the time being. However, it’s entirely possible that something like chained CPI could show up in the smaller deal, or provider cuts to Medicare, which were already reportedly agreed to in the Biden talks.

More will become clear tomorrow, after the meeting between the White House and Congressional leaders.

…of course, this also raises the prospect that no deal will be made and the debt limit will be reached on August 2. Republicans seem completely unable to accept the slightest tax increase, and Democrats unable to accept a deal without revenues. So we could very well get to August 2, and uncharted territory for the federal government.

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This really isn’t turning out well for Boehner. For better or worse, the Democrats look like the budget hawks. That has quite a bit of truth to it, since Republicans actually don’t give a damn about the budget deficit, they care about protecting rich people from paying taxes.

And Dave has more updates there, so go read the rest.

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