Republicans differ over tax flexibility with Obama

Reuters/Washington

Leading congressional Republicans said yesterday a broad deal with President Barack Obama on deficit reduction and entitlement reform remains possible but differed over potential flexibility on taxes, with the House speaker and budget leader not bending.

The top Republican in Congress, House of Representatives Speaker John Boehner, and Budget Committee Chairman Paul Ryan also agreed with Obama’s assessment that the US was not currently in a debt crisis but that one was looming.

Boehner and Obama failed at the end of 2012 to hammer out a deal to get America’s fiscal house in order but Boehner said he “absolutely” trusts Obama.

Ryan, his party’s 2012 vice presidential nominee whose budget proposal last week was dismissed by Democrats, quoted former Republican President Ronald Reagan’s 1980s view of dealing with the Soviet Union, saying that with Obama, he believes in the policy of “trust but verify.”

Obama has engaged in a couple of weeks of outreach to Republican and Democratic lawmakers - some have called it a “charm offensive” - but the prospects of a large deficit reduction deal by midyear remained unclear.

Obama is advocating more tax increases on the wealthiest Americans coupled with new spending cuts to help curb deficits that have topped $1tn in each of the past four years.

Such a deal could include curbing spending on costly entitlement programmes like the Social Security retirement programme and the Medicare health insurance programme for the elderly and disabled.

Speaking on Fox News Sunday, Senator Bob Corker, a Tennessee Republican, said: “There, by the way, is a chance on a deal. I know the president is saying the right things. And we have an opportunity over the next four to five months.”

Asked on ABC’s This Week if chances for a “grand bargain” were dead, Boehner offered some hope: “I don’t know whether we can come to a big agreement. If we do, it’ll be between the two parties on Capitol Hill. Hopefully, we can go to conference on these budgets - and hope springs eternal in my mind.”

Corker underscored the need for Democratic willingness on entitlement reform and signalled Republican flexibility on taxes.

“I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue,” Corker said. “And that doesn’t mean increasing rates. That means closing loopholes. It also means arranging our tax system so that we have economic growth.”

Boehner said if Obama “believes that we have to have more taxes from the American people, we’re not going to get very far.” Ryan called for “revenue neutral” tax reform without higher taxes.

Obama said last week the country was not in a debt crisis and will be “in a sustainable place” for the next 10 years.