Speaker John Boehner has given his response to the President’s press conference. He says that the talks broke down on two points.
First, there was an agreement to lower and flatten the tax rates, remove some of the special interest tax breaks and increase revenues in that manner. Boehner said that the President then suddenly asked for an additional $400 billion in revenues. In other words, it was the number, not the method that was at issue.
Second, the President’s plan did not cut enough from entitlements. The Republicans want the bulk of the cuts to come from Social Security, Medicare and Medicaid. The President wants them to come from discretionary spending and the military first and entitlements second.
Speaker Boehner says he does trust the President as a negotiator.
Boehner was disingenuous on one critical point. He claims that the President wants to raise taxes on “the American people.” That’s not accurate. When Boehner talks about “the American people” he’s talking about the rich and corporations that aren’t paying taxes right now. He keeps calling them “job creators” when they haven’t created jobs no matter how low their taxes have been dropped. It was the President’s demand that the Bush tax cuts on the highest earners be allowed to expire. That’s where the $400 billion was. Those highest earners have gotten a $40 billion a year break because of the Bush tax cuts just with a 4% increase in their tax rate.
Boehner says it’s the president who killed the deal because of that $400 billion over 10 years. Take your pick – both General Electric and Bank of America paid no taxes last year. The hedge fund manager tax dodge means that the 103 hedge fund and money managers on the Forbes 400 pay only 15% on their incomes, instead of the 32% that ordinary millionaires pay. They can make an argument that they need to protect small businessmen, but only if there is a redefinition of small business. A small business in the tax code should not be Cargill, with over 100,000 employees. It should not be Koch Industries or Walmarts. It should not be how a company is owned that qualifies it as a small business, but how big the business is. Boehner saying that he’s trying to protect “small businesses” is just more Republican nonsense. The guy who owns Clem’s Restaurant in my downtown is a small businessman, not David Koch.
Boehner said that he will be meeting with Congressional colleagues tonight to work out a deal, which they will then present to the President tomorrow. We will then find out who is willing to protect the middle class and the most vulnerable of us and who is trying to protect the super-rich and small businesses that aren’t small by any rational definition.
Republicans wanted to push the changes to the tax code to 2013 (in other words, don’t raise any revenues until after the election, but cut spending now) and be tied to killing the individual mandate in the health care law. That’s another case of the Republicans doing a kitchen-sink plan that mixes issues to blackmail the Democrats into whatever the Republicans want.
The bottom line is without a rational, logical, balanced deal, Moodys and Standards and Poors will cut our credit rating. That’s what they have told us, flat out. And they have made it very clear that any deal that does not include rational increases in revenue just won’t fly with the people we really have to get approval from. They will not accept a short term deal.