Posts Tagged ‘Medicare’

‘Fiscal cliff’ Talks at a Stalemate Over Tax Hikes

Thursday, December 13th, 2012

originally published in the Washington Post

As the White House and Republican leaders enter the final month of negotiations to avoid a year-end “fiscal cliff,” both sides struck an uncompromising tone Sunday, as warnings mounted that they will be unable to forge an agreement to stop an automatic series of deep spending cuts and large tax hikes that could push the economy into recession.

Following private meetings last week, the senior negotiators for the White House and the Republicans took to the airwaves Sunday to accuse the other side of intransigence and to demand that the opposition concede on the central question of how much to raise taxes on the wealthy.

“Right now, I would say we’re nowhere, period. We’re nowhere,” House Speaker John A. Boehner (R-Ohio) said on “Fox News Sunday.” Boehner added that the Republicans have offered a way to break the stalemate — by compromising on an overhaul of the tax code that would limit deductions that disproportionately benefit the rich.

But Treasury Secretary Timothy F. Geithner rejected that proposal Sunday, insisting that the wealthy pay higher tax rates and that Republicans come forward with a plan that meets that requirement. “There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up on the wealthiest Americans,” he said on NBC’s “Meet the Press.”

While it had always seemed likely that the two sides would reach a stalemate before finally coming to agreement — as has been the pattern over the past two years — lawmakers and congressional aides tracking the back-and-forth said there’s a growing probability that no deal will be reached in time to avoid the fiscal cliff.

“I think we’re going over the cliff,” Sen. Lindsey O. Graham (R-S.C.) said on CBS’s “Face the Nation.”

Geithner appeared on five Sunday morning news shows — and Boehner on one — amid an intensifying public-relations blitz related to the fiscal cliff. President Obama took his first domestic trip since winning reelection to the Philadelphia suburbs on Friday to press Republicans, which was followed by a Boehner news conference.

This week, Obama will gather with governors and make a speech to the Business Roundtable, a lobby group representing big business, to urge lawmakers to embrace his tax proposals. Boehner will meet with governors and rally with small-business owners against tax increases.

The debate over how to raise taxes on the wealthy is part of the broader discussion over how to reduce federal borrowing over the next decade. At the end of the year, tax rates are scheduled to increase on nearly all Americans, raising hundreds of billions of dollars of new tax revenue but costing the average family about $2,000 a year in take-home pay.

Obama wants to freeze tax rates for most Americans while allowing them to rise as high as 39.6 percent for the wealthiest people — defined as earning over $250,000 per year. That will reduce federal borrowing by about $1 trillion over a decade.

“There’s just no reason why 98 percent of Americans have to see their taxes go up because some members of Congress on the Republican side want to block tax rate increases for 2 percent of the wealthiest Americans,” Geithner said Sunday.

Then next year, Obama wants to overhaul the tax code to clean out deductions and loopholes that benefit the rich and some sectors such as the financial industry. That, the administration estimates, would generate about $600 billion in savings over a decade.Republicans, meanwhile, do not want to raise taxes on anyone. But in the wake of their electoral defeat last month, they have acknowledged that the wealthy will have to pay more. They want to raise about $800 billion in new revenue over the decade through an overhaul of the tax code that limits deductions. Higher rates, they say, will dissuade work and investment and hurt small businesses, and thus be a drag on economic growth.

Both sides agree that as a principle, keeping tax rates low while eliminating deductions is better than increasing tax rates. But Democrats say it’s not possible to preserve enough spending on government programs without raising well over $1 trillion in new tax revenues during the next decade — and they don’t believe it’s possible to do that without raising rates on the wealthy, raising taxes on the middle class, or dramatically scaling back worthwhile deductions such as the one for charitable giving.

Last week, in a private meeting with Boehner, Geithner made the Obama administration’s opening bid in the fiscal cliff talks — largely a reprisal of policies the administration has already advocated. In addition to $1.6 trillion in new tax revenue, the proposal called for $600 billion in spending cuts, a majority of it from Medicare and Medicaid, as well as a new policy to allow the president to raise the statutory limit on federal borrowing without a majority of Congress approving.

That would come on top of $1 trillion in spending cuts that were agreed to in 2011 and $800 billion in savings from the end of the wars in Afghanistan and Iraq.

Republicans dismissed the proposal as laughable. “I was flabbergasted. I looked at him and said, ‘You can’t be serious,’ ” Boehner said Sunday. “I’ve just never seen anything like it. You know, we’ve got seven weeks between Election Day and the end of the year, and three of those weeks have been wasted with this nonsense.”

The White House also has opened the door to a compromise that would increase rates on upper-income earners by less than the full amount they are scheduled to rise next year, when the top brackets rise from 33 to 35 percent and 35 to 39.6 percent. But Republicans have not agreed.

“It’s welcome that they’re recognizing that revenues are going to have to go up, but they haven’t told us anything about how far rates should go up, how far revenues should go up,” Geithner said.

Beyond openness to new revenues through an overhaul of the tax code, Republicans insist on significant savings from the nation’s health-care entitlements, as well as Social Security.

In talks with Boehner in the summer of 2011 over a deal to slow borrowing, Obama was willing to adopt a stingier formula for making cost-of-living adjustments to Social Security. But in this round of talks, the White House says it won’t make any changes to the program.

“We are prepared to, in a separate process, look at how to strengthen Social Security, but not as part of a process to reduce the other deficits the country faces,” Geithner said.

Obama Calls for Tax Credits for Hiring in Jobs Bill

Wednesday, September 14th, 2011

From – www.accountingtoday.com

President Obama addressed a joint session of Congress on Thursday evening to present a jobs bill containing an expansion of the payroll tax cut, tax breaks for new hires and salary raises, and other tax reform measures.

The $447 billion bill, known as the American Jobs Act, contains provisions for creating new jobs to build and repair infrastructure such as highway and roads, along with school construction and an extension of unemployment benefits. In addition, Obama outlined a series of measures, including tax breaks to encourage companies to hire the long-term unemployed, along with veterans. He also called for an extension of the payroll tax cut for employees and an expansion of the tax cut to small business employers. Obama repeatedly emphasized that the bill contained many tax proposals that had originated with Republicans.

“It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business,” he said.

Obama is battling persistent unemployment that his administration has admitted is likely to remain above 9 percent through next year. He called on lawmakers to put aside partisan politics and work to fix the economy before the next election.

“You should pass this jobs plan right away,” he repeatedly urged. “Everyone here knows that small businesses are where most new jobs begin. And you know that while corporate profits have come roaring back, smaller companies haven’t. So for everyone who speaks so passionately about making life easier for ‘job creators,’ this plan is for you. Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers’ wages. Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. If you have 50 employees making an average salary, that’s an $80,000 tax cut. And all businesses will be able to continue writing off the investments they make in 2012. It’s not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that’s in this plan. You should pass it right away.”

Obama said the bill would provide funds to repair decaying roads and bridges across the country, and repair and modernize at least 35,000 schools. He promised to cut the red tape that has prevented some of the projects from getting started in the past. He also pledged to set up an independent fund to attract funds from the private sector and issue loans based on how badly a construction project is needed and how much good it would do for the economy.

Funds would also be used to prevent teacher layoffs and rehire teachers who had lost their jobs due to budget cuts, and provide summer jobs to disadvantaged young people.

Obama also said the bill would provide tax credits to hire veterans. “We ask these men and women to leave their careers, leave their families, risk their lives to fight for our country,” he said, drawing applause from both sides of the aisle. “The last thing they should have to do is fight for a job when they come home.”

The bill would also provide companies with a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job. “We have to do more to help the long-term unemployed in their search for work,” said Obama. “This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job.”

The plan would also extend unemployment insurance for another year. “If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy,” said Obama. “Democrats and Republicans in this chamber have supported unemployment insurance plenty of times in the past. And in this time of prolonged hardship, you should pass it again—right away.”

Obama also called for extending the payroll tax cut in last December’s tax legislation, which reduced Social Security taxes from 6.2 percent to 4.2 percent this year. In urging the extension, Obama referred to the pledge not to raise taxes that many Republican lawmakers signed at the behest of Grover Norquist’s group, Americans for Tax Reform. However, the 6.2 percent rate would be cut to 3.1 percent under the new bill, according to Vice President Joe Biden in an interview Friday on the Today Show.

“Pass this jobs bill, and the typical working family will get a $1,500 tax cut next year,” said Obama. “Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket. This expands on the tax cut that Democrats and Republicans already passed for this year. If we allow that tax cut to expire—if we refuse to act—middle-class families will get hit with a tax increase at the worst possible time. We can’t let that happen. I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.”

Obama said the cost of the bill would be paid for with a new, more ambitious deficit reduction plan he plans to release a week from Monday. In addition to spending cuts, the deficit reduction plan would make what he called “modest adjustments” to Medicare and Medicaid, and reform the Tax Code to encourage “the wealthiest Americans and biggest corporations to pay their fair share.”

“I’m also well aware that there are many Republicans who don’t believe we should raise taxes on those who are most fortunate and can best afford it,” said Obama. “But here is what every American knows: While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary—an outrage he has asked us to fix. We need a tax code where everyone gets a fair shake and where everybody pays their fair share. And by the way, I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.”

Obama also said he would work on corporate tax reform as well, calling the corporate tax code “a monument to special interest influence in Washington.”
“By eliminating pages of loopholes and deductions, we can lower one of the highest corporate tax rates in the world,” he added. “Our tax code should not give an advantage to companies that can afford the best-connected lobbyists. It should give an advantage to companies that invest and create jobs right here in the United States of America.”

Obama contrasted tax breaks for large oil companies with those for small businesses.
“Should we keep tax loopholes for oil companies?” he asked. “Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? Right now, we can’t afford to do both. This isn’t political grandstanding. This isn’t class warfare. This is simple math. These are real choices that we’ve got to make. And I’m pretty sure I know what most Americans would choose. It’s not even close. And it’s time for us to do what’s right for our future.”

In response to the speech, House Speaker John Boehner, R-Ohio, indicated that he was ready to work on a jobs package with Obama, but he also asked for consideration of the Republican alternative.

“American families and small businesses are hurting, and they are looking for the White House and Congress to seek common ground and work together to help get our economy back on track,” Boehner said in a statement. “Republicans have laid out a blueprint for economic growth and job creation—our Plan for America’s Job Creators—that focuses on one thing: removing government barriers to private-sector job growth. The proposals the President outlined tonight merit consideration. We hope he gives serious consideration to our ideas as well. It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation.”

Ahead of the jobs speech, Senate Minority Leader Mitch McConnell, R-Ken., struck a more confrontational tone in remarks on the Senate floor Thursday. “This isn’t a jobs plan,” he said. “It’s a re-election plan. That’s why Republicans will continue to press for policies that empower job creators, not Washington.” For details, visit Obama Calls for Tax Credits for Hiring in Jobs Bill on the Accounting Today website, www.accountingtoday.com.