In December, the Democrats agreed to a last-minute deal which will preserve the tax rates established under the Bush administration for at another two years. Only six-months later they are insisting on raising taxes as part of the SHMOTUS’ deficit reduction talks. Their insistence on raising taxes has caused an impasse in the talks and as a result House Majority Leader Cantor has quit the talks. He believes the only way to get through this impasse is for the president and the speaker to get involved. Cantor’s exit from the talks was quickly followed with the exit of Senator Jon Kyl leaving no Republicans involved with the budget cutting talks.
“We’ve reached the point where the dynamic needs to change,” Mr. Cantor said. “It is up to the president to come in and talk to the speaker. We’ve reached the end of this phase. Now is the time for these talks to go into abeyance.”
Still, Mr. Cantor remained optimistic about the prospects for a deal. He said the Biden group had already made significant progress and had tentatively identified more than $2 trillion in spending cuts over the next 10 years. But he said there could be no agreement on an overall package without breaking the impasse between Republicans’ refusal to accept any tax increase, and Democrats insistence that some tax increases be part of the deal.
“We have to get over this impasse on taxes,” he said. “The utility of these talks has been building the specifics. The groundwork has been laid, the blue print is there, we have a vision of the agreement.”
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Time is running out for an agreement, which must be passed prior to August 2, in order for there to be enough support generated for raising the debt limit.
The $14.29 trillion debt limit was breached on May 16, although Treasury officials have said they have the ability to juggle assets to delay the possibility of the U.S. defaulting on its debts until Aug. 2 at the latest.
In the Senate there is also broad GOP opposition to a tax increase:
“Taxes aren’t going to be raised in what I hope will be a large and significant package that will make a difference for our country,” Mr. McConnell said Wednesday at a breakfast hosted by the Christian Science Monitor. “If they couldn’t raise taxes when they owned the government, you know they can’t get it done now,” he said referring to the Democratic lawmakers.
The left wing of the Democratic party was furious over the deal to extend the Bush-era taxes reached in December, and were also extremely unhappy with the spending deal reached to fund the federal government through the remaining months of fiscal 2011—an agreement that saw cuts to many domestic programs important to the party.
Maybe that why Senator Jon Kyle just announced that he too will also drop out of the debt talks, a source within his office confirms today. The Arizona Republican’s office will issue a formal statement shortly.
Speaker Boehner has backed up Cantor’s dismissal of a tax increase. At his weekly press conference this morning, Boehner said Democrats must abandon any tax increases if negotiations on deficit reduction and an increase in the debt limit are to continue. And he added that no tax hike would pass the Republican-controlled House of Representatives.
“I understand his frustration,” said Boehner. “I understand why he did what he did… I’ve talked to the majority leader about these talks. I know the frustration he feels when Democrats insist on bringing tax hikes.”
How would Boehner fill the chasm now that Cantor and Kyl are out? “I would expect to hear from” the White House, he said. Would he call them? Next question.
Boehner amplified Cantor’s main point — there would be no deal with tax increases.
“They [Democrats] want more stimulus spending and higher taxes,” he said. “We have been clear. Tax hikes are off the table. A tax hike cannot pass the U.S. House of Representatives… these conversations could continue if they take the tax hikes out of the conversation.”
The Republican stand is also reflective of the will of the American People. The latest Bloomberg poll reports that 55 percent of Americans believe that cutting taxes, along with slashing spending, is necessary to give businesses confidence to start hiring again
This impasse proves we’re still very far from the point at which any Progressive Democrat is going to be willing to vote for long-term fiscal prudence, instead they look to pass blame back on the voters in the form of tax increases. Their insistence on increasing taxes and demonizing any attempt to reign in entitlement spending dooms the United States to a horrible economic future.