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<h1>White House pushing tax hikes, spending cuts to avoid sequester</h1>
<h3>
By <a href="http://www.washingtonpost.com/zachary-a-goldfarb/2011/03/09/AB1OHIQ_page.html" rel="author">Zachary A. Goldfarb</a>, <span class="">Published: February 22</span>
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<p>The White House is promoting a $1.8 trillion package of spending cuts
and tax hikes as the best approach to replace deep reductions in <a href="http://www.washingtonpost.com/local/education/us-schools-brace-for-federal-funding-cuts/2013/02/21/eb7dbdf8-7c39-11e2-82e8-61a46c2cde3d_story.html">domestic </a>and <a href="http://www.washingtonpost.com/world/national-security/military-service-chiefs-warn-budget-cuts-will-undermine-readiness/2013/02/21/a8d19480-7c60-11e2-82e8-61a46c2cde3d_story.html">defense spending </a>set to begin next week — even as Republicans dismiss the proposal as not serious.</p>
<p>With barely more than a week until the deep cuts, known as<a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/20/the-sequester-absolutely-everything-you-could-possibly-need-to-know-in-one-faq/"> the sequester</a>,
take effect, President Obama and his advisers this week maintained that
a deficit reduction plan he put on the table in December amid
negotiations over the “fiscal cliff” should still be considered by
Congress as a way to avoid another fiscal crisis. Obama spoke with House
Speaker John A. Boehner (R-Ohio) and Senate Minority Leader Mitch
McConnell (R-Ky.) on Thursday, but no progress was reported.</p><p>Obama
originally made the offer to Boehner in December negotiations, which
ultimately fell apart. The president’s plan — the details of which were
known in December <a target="_blank" href="http://www.whitehouse.gov/sites/default/files/docs/deficit_reduction_table_bucketed_r8.pdf">but were reiterated on the White House Web site on Thursday</a>
— would consist of $200 billion in cuts to domestic and defense
programs; $400 billion in reductions in health spending, including
Medicare; $200 billion in cuts to other mandatory spending, such as farm
subsidies; and $130 billion in savings achieved through a new
cost-of-living formula that would slow spending on federal programs,
including Social Security. The president’s plan would also raise
$680 billion in fresh tax revenue, by limiting tax breaks for the
wealthy, closing corporate loopholes and changing the cost-of-living
formula that also determines tax brackets.</p><p>Combined with lower
interest costs as a result of the reduced federal borrowing, the White
House said this week that Obama’s proposal would achieve $1.8 trillion
in deficit reduction over 10 years. That would come on top of
$2.5 trillion in deficit reduction already achieved in deals between
Congress and the president. </p><p>“His proposal resolves the sequester
and reduces our deficit by over $4 trillion dollars in a balanced way —
by cutting spending, finding savings in entitlement programs and asking
the wealthiest to pay their fair share,” White House Communications
Director Jennifer Palmieri wrote <a href="http://www.whitehouse.gov/blog/2013/02/21/balanced-plan-avert-sequester-and-reduce-deficit">in a blog post Thursday</a>.
“As a result the deficit would be cut below its historic average and
the debt would fall as a share of the economy over the next decade.”</p><p>But
Republicans dismissed the proposal out of hand, saying that Obama is
looking to essentially double up on the new taxes he won in the “fiscal
cliff” deal. That last-minute deal, which came after negotiations
between Obama and Boehner collapsed, allowed tax rates to rise for
people earning more than $400,000 a year, raising more than $600 billion
in revenue. </p><p>“The president’s final offer was dramatically out of
‘balance,’ with greater than $400 billion more in tax hikes than in
spending cuts,” Boehner spokesman Brendan Buck said. “The president was
offered a truly balanced approach <span>. . .</span> and he turned it down. His appetite for higher taxes knows no bounds.”</p><p>Boehner’s <a href="http://articles.washingtonpost.com/2012-12-03/business/35623322_1_fiscal-cliff-tax-revenue-house-gop-leaders">original proposal</a>
to the White House was to raise new tax revenue through an overhaul of
the tax code — without raising rates. But Republicans say that while
they still would still like to overhaul the tax code, any reform should
not increase taxes. </p><p>The Boehner plan also called for raising
$600 billion by reducing spending on federal health programs —
$200 billion more than Obama’s proposal — in part by increasing the
Medicare eligibility age from 65 to 67. Boehner also embraced new
formulas to reduce spending and readjust tax brackets to generate budget
savings.</p><p>Obama has acknowledged that with only a week until the
sequester hits, Congress may not have enough time to negotiate another
sweeping deal. He has backed a Democratic plan to delay the sequester
through the remainder of the year, by closing a limited set of tax
breaks and corporate loopholes and through alternative spending cuts —
largely to farm subsidies.</p><p>Republicans have grown increasingly
willing to allow the sequester happen. Last year House Republicans
passed a plan to cancel the defense component of the sequester and
instead cut more deeply into domestic programs. Boehner has said any
plan should balance the budget in 10 years, a proposal that would
require Congress to find savings far in excess of the sequester.</p><p>Obama
officials say that if his deficit reduction plan were implemented, it
would lower the deficit as a percentage of the economy to below
3 percent by 2015 – from 7 percent last year. That would be enough to
stabilize federal borrowing for a decade – though it would start to rise
fast again in the next decade.</p><p>With time running out, the White
House is showing a sense of confidence that it will win the battle,
while Republicans are saying they have the upper hand.</p><p>Obama aides <a href="https://twitter.com/pfeiffer44/status/304610219319779328">note</a> a <a href="http://www.people-press.org/2013/02/21/if-no-deal-is-struck-four-in-ten-say-let-the-sequester-happen/">Pew Research Center poll</a>
released this week, which says that 76 percent of Americans want
Congress to replace the sequester with a combination of spending cuts
and tax increases. Only 19 percent say tax increases should be off the
table.</p><p>Republicans, however, say they are confident Obama will be
blamed for the sequester — and argue that it should happen without an
alternative agreement to cut spending.</p><p>“Most Americans are just
hearing about this Washington creation for the first time: the
sequester. What they might not realize from Mr. Obama’s statements is
that it is a product of the president’s own failed leadership,” Boehner <a href="http://online.wsj.com/article/SB10001424127887323495104578314240032274944.html">wrote</a> in the Wall Street Journal this week. </p><p>“The
president’s sequester is the wrong way to reduce the deficit, but it is
here to stay until Washington Democrats get serious about cutting
spending. The government simply cannot keep delaying the inevitable and
spending money it doesn’t have.”</p></div><br><div><br>-- <br>Art Deco (Wayne A. Fox)<br><a href="mailto:art.deco.studios@gmail.com" target="_blank">art.deco.studios@gmail.com</a><br><br><img src="http://users.moscow.com/waf/WP%20Fox%2001.jpg"><br>
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