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Obama Digs in His Heels on Taxes

"Revenue enhancements" must be on the table, the president insists.

by
Peter Roff

Bio

July 12, 2011 - 12:00 am

In a remarkable performance Monday, President Barack Obama dug in his heels, insisting that new taxes and new revenues had to be part of any grand deal struck to avoid going over the debt ceiling.

Obama used his midday presser to argue for “a balanced approach” that included some kind of revenue enhancements as the price for slicing away at entitlements and other government programs, if not now then in a few years.

“What we have talked about is that starting in 2013, that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time when they’re making billions of dollars of profits,” the president said.  “As part of a broader package, we should have revenues — and the best place to get those revenues are from folks like me who have been extraordinarily fortunate and that billionaires and millionaires can afford to pay a little bit more.”

Mangled syntax aside, what Obama is saying is, in essence, if you have more you should expect to pay more. Unfortunately, class envy is a poor foundation on which to base a program to create growth in the U.S. economy.

“President Obama has proven once again that he stands for nothing besides higher taxes, continued borrowing and bigger government,” said Heritage Action CEO Michael A. Needham in an interview with PJMedia. “Until this president enters ‘tax and spend rehab’ there is nothing to talk about and he should have to live under the debt limit. This is, after all, why the debt limit exists.”

For his part, Obama is looking at this as a clash between cutting entitlements and raising taxes — two forces that are polar opposites of one another. What he neglects is that there are other options out there, among them the “Cut, Cap and Balance” approach that began as a pledge and has, in the last week, become legislation in the Senate and will soon become a bill in the House.

Colin Hanna, president of Let Freedom Ring! and a leader of the broad-based coalition backing the approach, told PJMedia, “It’s now clear that something has to break the logjam, and one real game-changer has emerged: the Cut, Cap and Balance Act that would give the president what he says he must have, a debt ceiling increase of around $2 trillion, but if and only if a balanced budget amendment with real teeth passes both the House and the Senate.”

“The balanced budget amendment is an 80 percent issue with the public,” Hanna adds. “The political risk lies in opposing it, not supporting it.  Democrats will be hard pressed to object if it’s the one remaining obstacle between them and the debt ceiling increase, and Republicans will swallow hard and approve an increase if it brings with it the promise of a permanent fix through a balanced budget amendment. It’s the only solution on the horizon that can bring the sides together for the good of the nation as a whole.”

Indeed, the legislative pivot in which the Republicans are now engaged — to pass a debt ceiling increase with a budget deal that cuts the deficit and caps spending, and which goes into effect only upon the passage of a balanced budget amendment — is strategically smart. Rather than take the amendment first, the newer approach makes the debt ceiling increase a carrot which can only be reached by swinging the BBA stick.

Obama had much to say in his remarks about the need for fairness and balance in addressing the debt ceiling issue — language that seems to be about making a specific appeal to the independents he needs to win re-election. It’s not likely to work as he intends.

“President Obama proved just how astonishingly out of touch he is with the American public at his press conference when he said, ‘I’d rather be talking about things everyone loves, like new programs,” Americans for Prosperity Vice President for Policy Phil Kerpen told PJMedia. “This is exactly the mindset that got us into this mess.”

“Politicians’ appetite to install new government-spending programs at the expense of taxpayers’ hard-earned dollars has crippled our federal budget.  We’ve spent and borrowed so much that grassroots Americans from coast-to-coast are rising up and demanding an end to the runaway spending. Fortunately, Obama did finally recognize today that any increase in the debt ceiling requires fundamental fiscal reforms to cut spending and put us on a path to fiscal responsibility,” Kerpen says, while urging Obama to publicly support the consensus balanced budget amendment that “would finally put an end to reckless borrowing, taxing, and spending.”

House Speaker John Boehner, whom the president praised for his leadership earlier in the day, remained unyielding to the demand for new taxes.

Speaking on the Laura Ingraham Show, Boehner said, “I just think it’s time for us to get serious about our fiscal situation, both the deficit and our long-term debt. And I’ve made it clear all through this fight that we should not increase the debt limit without real spending cuts and reforms to restrain future spending — and no debt limit increase unless the cuts are larger than the hike.”

Alluding to spending cuts that have been previously identified as being on the table, Boehner continued, “We’re going to look at those cuts as the starting point. But we need real reform, we need real cuts in spending, and we need real controls to make sure this doesn’t happen again. And whether it’s spending caps, the balanced budget amendment, we’ve got to have real reforms in place to make sure that once we clean up this mess it can’t happen again.”

In this Boehner touches on the key point: It’s not a matter of finding a way to avoid kicking the can down the road for another 30, 60, 90, or 180 days — as Obama himself said in his presser. It’s also not a matter of finding a solution that will last until the debt ceiling is again reached. The challenge is to provide a permanent solution, the kind that can’t be found in any kind of a negotiated deal, large or small; it can only be found in the “Cut, Cap and Balance” approach.

Peter Roff is a contributing editor at U.S. News & World Report. A former senior political writer for United Press International, he is currently a senior fellow at the Institute for Liberty and at Let Freedom Ring, a non-partisan public policy organization.
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