Posted by: Schuyler R. Thorpe | July 15, 2011

Some Republicans Wake Up To The Possibility Of Tax Increases To Solve Debt Ceiling Problem

(The writing is finally on the wall and the GOP just started realizing how FUCKED they would be if they decided *against* any tax increases–which in turn would’ve caused our nation to default automatically; come August 2nd.

BTW: How does Sarah Palin taste to you turkeys anyway? Still have that down-to-Earth, Alaskan flavor?)

Revenue debate rages in runup to budget talks

WASHINGTON (Reuters) – As President Barack Obama and lawmakers rush to craft a budget deal to keep the United States from possibly defaulting on debt or shutting major government services, Republicans on Wednesday signaled a willingness to go along with revenue increases.

One day before a crucial U.S. budget meeting between the White House and congressional leaders, House of Representatives Majority Leader Eric Cantor floated a possible tax compromise, saying Republicans could agree to closing some tax breaks in a budget deal as long as they were offset with tax cuts elsewhere.

“Any discussion about loopholes must be accompanied by offsetting tax cuts,” Cantor said at a news conference.

His comments marked a shift from his party’s previous insistence that revenue increases cannot be part of the deal — a stance that has been undermined by Senate Republicans’ recent vote to end a tax break for ethanol producers.

Obama hopes to strike an agreement soon with Republicans on reducing massive budget deficits by cutting as much as $4 trillion over a decade through a combination of less spending and increased taxes. Doing so could clear the way for also increasing U.S. borrowing authority that is now capped at $14.3 trillion.

He and Congress are up against a fast-approaching August 2 deadline.

If the debt limit is not raised by then, there are fears the United States could either miss some loan payments or be forced into cutting off major government benefits including Social Security checks.

Obama said such an outcome cause “a whole new spiral into a second recession or worse.”

Republicans have not backed off their opposition to any increases in tax rates for the wealthy or limiting their deductions.

But Senator Jon Kyl said Republicans had agreed to “between $150 billion and $200 billion” in more revenues.

Kyl, the No. 2 Senate Republican, outlined two possible ways to bring the additional revenues to the government: sales of government property and additional fees for government services.

Such revenue increases were tentatively agreed to during negotiations Vice President Joe Biden had been conducting with lawmakers until Republicans walked out in late June citing an impasse over taxes.

In a lengthy speech on the Senate floor Kyl criticized Democratic proposals to get rid of tax breaks on corporate jets or toss an accounting method known as “last in first out” that eases business tax burdens.

Democrats say they have offered up a “menu” of revenue increases of as much as $400 billion in the deficit-reduction and debt limit talks.

‘A LITTLE BIT OF GIVE’

Obama is scheduled to meet at 11:15 EDT on Thursday with Democratic and Republican congressional leaders. Obama will push for a big agreement that could target as much as $4 trillion in savings — double the size of what had been under discussion, according to Democratic officials. They provided no details on how they would reach that target.

So far, financial markets have been little affected by the theater in Washington as investors assume that a deal to cut deficits and raise the debt limit will be reached in time.

Cantor’s comments were a positive sign, one analyst said.

“It’s a little bit of give on their part,” said Andrew Richman, fixed income strategist at SunTrust Private Wealth Management in Palm Beach, Florida. “They do understand the gravity of the situation.”

Before the Biden talks ended, negotiators had identified roughly $2 trillion in spending cuts that would allow lawmakers to show voters they are taking steps to control the national debt even as they sign off on further borrowing.

Since then, Democrats have hammered the Republicans for supporting tax breaks such as the one for corporate jets, saying their opponents are more interested in protecting the wealthy than fixing the country’s fiscal problems.

Republicans have said tax increases would hurt the economy. They also say any tax hike could not pass Congress — an assertion the White House questioned.

A leading Republican questioned the idea of tinkering with taxes only weeks before the August 2 deadline.

Senate Republican Leader Mitch McConnell said he would rather tackle changes to the tax code separately as part of an effort to lower rates overall.

“To sort of cherry pick items in the context of this current negotiation with the White House strikes me as pretty challenging,” McConnell said at a news conference.

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