Wednesday, April 13, 2011

CQ Roll Call Daily Briefing: Taxes, Again

CQ Roll Call Daily Briefing

Wednesday, April 13, 2011

 Today In Washington

THE WHITE HOUSE: Obama’s speech on his framework for combating deficits and curbing the growth of the debt begins at 1:35 at George Washington University.

He welcomed the bipartisan congressional leadership into the Cabinet Room at 10:40 to preview his proposal. Invited were Boehner, McConnell, Cantor and Kyl from the GOP and Reid, Pelosi, Durbin and Hoyer for the Democrats.

THE HOUSE: Convenes at noon and is expected to have its last vote by 7. Debate on the 24-week spending cut package will get started, but the vote on passage will come tomorrow.

The House will also pass Republican legislation to kill the Prevention and Public Health Fund created in the health care overhaul law to help improve primary care at community-based and other local health centers. Doing so would save $16 billion over a decade. There’s minimal chance the Senate will go along.

THE SENATE: Convened at 9:30 to return, once again, to the small-business research legislation. Reid is pushing for a deal he can announce this afternoon that would wind down the unrelated amendment bazaar, but now senators who didn’t get their way on the spending bill may want to try to get something on this bill instead.

DEBATE IN THE BALANCE: Nobody’s got a plan that would actually balance the budget anytime in the foreseeable future, but Obama is going to assert this afternoon that he’s got a more “balanced” approach than the Republicans for shrinking annual deficits and slowing the growth of the federal debt.

That, of course, is the president’s way of framing his profound and about-to-get-deeper fiscal policy differences with the GOP. And the biggest disconnect of all isn’t shaping up to be about the future of health care entitlements, or Social Security, or the ballooning defense budget. At least at the outset, it’s going to be about taxes.

The president will make clear this afternoon that raising them is part of his recipe for shedding $4 trillion in cumulative red ink during the next decade. He’ll almost certainly dig in and say that his acceptance in December of an extension of all the Bush tax cuts won’t be repeated; while he’ll be vague about the current tax rates for the vast majority of Americans, he’ll draw a bright line against continuing the 35 percent top tax rate for families making more than $250,000, which is set to become 39.6 percent a month after the 2012 election.

Beyond that, he’ll promise “tax reform that reduces spending in our tax code,” which means he wants to raise a lot of revenue by curtailing the roster of credits, deductions and other breaks that cost the Treasury $1.2 trillion a year.

REVENUE REVIEW: Even before heading to the White House this morning, the top two House Republicans held firm against those ideas. “Tax increases are unacceptable and are a non-starter,” Boehner declared in a statement. “We can’t raise taxes,” Cantor said this morning on CBS. “That was settled last November during the elections.”

But a glimmer of an opening for compromise was offered by Paul Ryan, even though he’s the author of the tax-cutting budget Republicans are getting ready to push through the House on a party-line vote Friday afternoon. While that budget would do the opposite of what Obama wants and drop the top tax rate to 25 percent from 35 percent after next year, it would reduce some of the same tax expenditures the president also has on his hit list. And on ABC this morning, Ryan emphasized that he was a supporter of “tax reform.” That may well mean that, while he’ll fight raising income tax rates, he could sign on to a budget that raises revenue by closing loopholes.

The three biggest tax expenditures, though, are presumably politically untouchable: The exclusion for employer-paid medical insurance, the exclusion for retirement savings and the deduction for mortgage interest. Combined, they result in almost $500 billion a year in lost IRS revenue.

LET THEM WORRY ABOUT THE DETAILS: Beyond the tax standoff, the president is going to talk about continuing the sort of domestic spending restraint embodied in last week’s midyear appropriations-bill deal, trimming the defense budget and holding down health care entitlement spending. He will specifically reject the House budget plan’s call for creating an insurance subsidy system for the elderly to replace Medicare. But he’s unlikely to offer specifics of what he’d like instead — once again leaving it up to Congress (as he most famously did on the health care bill) to come up with the details first.

And to that end, he continues to look for the Senate’s Gang of Six to unveil a bipartisan package two weeks from now that would be largely along the lines of what he wants. In recent days, the personal marketing skills of one of the group's three Republicans, Saxby Chambliss of Georgia, have emerged as a strong key to reaching a grand bargain.

LINGERING DISSENT: Suspense is fading by the hour over whether the spending cut bill will get done before the deadline, which is once again just 60 hours away. The deal is cooked, and it will be embraced by decently-sized (and arguably bipartisan) majorities in the House tomorrow and in the Senate with a few hours to spare on Friday.

There’s no need to get anxious about the parliamentary maneuvering that might look, at least at first blush, like Republicans are going to pry open the deal by adding language to block funds for Planned Parenthood or carrying out the health care law. Even if that happens in the House, the required 60 senators won’t go for it.

Still, a decent number of old-line liberals and even some Democratic centrists are agitated, believing Obama gave away more than he had to — especially on spending for environment and Justice programs. And they may even enlist Hoyer as the highest-profile Democratic “no” vote in the House tomorrow.

And some pieces of the tea party movement are furious for the opposite reason: They’re concluding Boehner cut a deal that used so much accounting wizardry to get to the claim of $38 billion in domestic and foreign aid spending reductions. Others are annoyed that lawmakers gave their own overhead a relatively modest haircut along the way. But at least as many prominent fiscal conservatives are coming out in favor of the deal (Tom Price, Jeb Hensarling, for example) as are opposed (Jim Jordan, Mike Pence, etc.). And, while her presidential water-testing continues to draw a lot of attention in Iowa and in some national polls, very, very few of her colleagues in the GOP Conference care what Michelle Bachmann has to say about the deal.

Rand Paul may yet give voice to that discontent with an old-fashioned Senate filibuster that pushes a little too close for comfort to the deadline – which also marks the start of the two-week congressional recess.

R.I.P.: Sidney Harman, the audio equipment mogul who bought Newsweek last year and oversaw its merger with The Daily Beast, died in Washington late last night. He was 92 and learned that he had  leukemia only about a month ago — shortly after his wife, Jane Harman, resigned her California congressional seat to take the reins of the Woodrow Wilson Center, a foreign policy think tank.

THE OTHER DAILY BRIEFING: The only major league team in Washington that’s worthy of the postseason opens its first round playoff series against the New York Rangers at 7:30 in the Verizon Center. One great way to follow the Capitals’ run for the Stanley Cup is to read the particularly crisp and insightful blog Caps 'Round the Clock. (The author’s also a great guy.)

HAPPY BIRTHDAY: Three Democrats: Sen. Bob Casey of Pennsylvania (51), California House members Susan Davis (67) and Jim Costa (59).

— David Hawkings, editor

Become a Facebook fan at facebook.com/DavidHawkingsDC. Or follow me on Twitter at twitter.com/davidhawkings.

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David Hawkings
dailybriefing@cqrollcall.com

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