Congress continues squabble over tax cuts

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Sen. Pat Toomey warned Tuesday that a Democratic threat to allow all Bush-era tax cuts to expire next year would plunge the nation into a needless recession.

Mr. Toomey, a key Republican member of the so-called super committee that grappled with budget issues over the last year, said stepping off the fiscal cliff at the end of the year could batter an already weak economy while doing nothing to address the country's longer-term fiscal ills. At the end of the year, $1.2 trillion in spending cuts along with tax increases would be triggered if Congress and the administration are unable to reach some budget agreement.

Last week, another super committee member, Sen. Patty Murray, D-Washington, suggested that she and other Democrats would be willing to allow the budget sequestration to take place, extending the budget debate into the next year, when the Bush rates would have expired. Mr. Toomey noted that former Democratic National Chairman Howard Dean had made a similar suggestion in a television interview.

"This is stunning to me," Mr. Toomey said in a speech at the Brookings Institution. "It's disturbing that these very prominent folks, knowing that this multi-trillion tax increase would very likely cause a recession, especially when you consider how fragile the economy is right now."

Some Democrats, who favor an extension of the Bush era rates only for those making less than $250,000, see their leverage in the budget talks increasing after the currently scheduled end to the lower rates. Ms. Murray made that argument last week as she spoke from the same stage where Mr. Toomey decried that plan. She and other Democrats have criticized a plan offered previously by Mr. Toomey that would drive down rates across the board and pay for the revenue loss by closing loopholes and broadening the tax base. Ms. Murray and other Democrats have branded the suggestion as a giveaway to the rich, contending that middle-class taxpayers would end up losing current deductions to help pay for the permanently lower rates for the rich.

Mr. Toomey bristled at that characterization, arguing that he had stipulated that the loophole closing and base broadening could be structured in such a way that the burden of the changes fall only on those who are currently in the top two tax brackets. He noted that such a change would not be his first choice -- he would prefer to balance the budget with changes on the spending side -- but he said he recognized the political reality that Democrats would demand new revenue from more affluent taxpayers as part of any overall spending deal.

Mr. Toomey said that rather than flirt with the fiscal cliff, Congress should again extend the Bush cuts, for one year, to allow negotiators time to craft a more permanent deal that would include a fundamental restructuring of the tax code along with cost-savings reforms to major entitlement programs.

"And let me be clear," Mr. Toomey said. "I know I'm not going to get my way on everything. The entitlement reform that we do isn't going to look exactly the way I would write the plan. But we do have to agree on the fundamental problems, we do have to grace the fact that these programs have to be reformed."

Ms. Murray wasn't swayed by the Republican's new overture. In a speech on the Senate floor shortly after Mr. Toomey's remarks, she said, "just this morning, the Republican senator from Pennsylvania gave a speech about his plan for even deeper tax cuts for the rich -- down to just 28 percent for the wealthiest Americans. It's stunning. While Democrats are fighting for tax cuts for the middle class, Republicans are not only holding them hostage to continue the tax cuts for the rich -- they are also scheming ways to cut taxes for the wealthiest Americans even more."

Echoing President Barack Obama, the Democrat challenged Republicans to vote to preserve lower rates for taxpayers below the $250,000 income level.

While the opposing majorities of the House and Senate have scheduled a variety of budget and tax votes for political purposes, there is general agreement that any window for progress on a budget deal is unlikely before the lame duck session of Congress following the presidential election.


Politics editor James O'Toole: or 412-263-1562. First Published July 25, 2012 4:00 AM


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