Anti-Tax Forces Have Lost the Public. Will the White House Fight or Cave?



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Recent polling makes clear that most Americans do not agree with the Tea Party-backed members of Congress who believe the only “concession” they should make in deficit negotiations is to prevent a calamitous default on U.S. debt obligations. The question is, will the White House use this advantage and demand a balanced approach, or will it back down again to anti-tax, anti-government lawmakers who are outside the mainstream of public opinion?

More polling has been released indicating that a large majority of Americans want Congress to address the federal budget deficit with a combination of tax increases and spending cuts. The latest polling also shows that 82 percent of respondents understand that failure to raise the debt ceiling will do serious harm to our economy and far more respondents blame Republican leaders than Obama for being unwilling to compromise.

Last week, the Republican leadership in the Senate began pushing a proposal that would allow the President to raise the debt ceiling after symbolic but meaningless votes, with no guarantee of spending cuts. There has been talk of adding some amount of spending cuts to that plan to make it more palatable to Tea Party-backed lawmakers, but it’s unclear whether they can be satisfied with any compromise.

Republicans in the House have taken a particularly extreme stance. On Tuesday they passed the “Cut, Cap, and Balance” Act that would allow the U.S. to default on its debt obligations unless the U.S. amends the constitution to bar budget deficits, require a two-thirds supermajority of both chambers of Congress to approve any tax increase, and shrink the government to a level not seen in most of our lifetimes.

Meanwhile, the “Gang of Six” U.S. Senators who have been negotiating for months behind closed doors on deficit reduction finally released the outlines of a plan this week, although it’s not clear how or whether it could affect the negotiations over the debt ceiling.

Citizens for Tax Justice released a statement blasting the “Gang of Six” plan because it would reduce revenue by $1.5 trillion compared to current law, and because it includes a “territorial” tax system that would exempt corporate profits that are earned offshore, or simply shifted offshore into tax havens.

Unfortunately, the deal President Obama has been negotiating is even worse in the sense that he has proposed to extend $4.7 trillion worth of tax cuts and only raise $0.7 trillion in new revenue through tax increases, compared to current law. Republican leaders, who want to extend all the Bush tax cuts, would reduce revenue even more, as explained in a statement released by CTJ last week.

As of this writing, several media outlets are reporting that the White House is negotiating a deal with Speaker Boehner, possibly one with massive cuts in public services but no guarantee of any revenue increases.

We hope the reports are wrong, and we hope that we won’t see a repeat of the last major “compromise” that marked a capitulation to anti-tax lawmakers whose views were out of sync with the American people.

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