Whether the country pays its bills on time or not rests for now on the answer to a key question: Which, if either, party will cave first on the question of tax revenues? At best, Republicans say they’re willing to look at new Dem-proposed revenue sources…but only if they can give that money right back to stakeholders in the form of additional tax cuts.
“If the President wants to talk loopholes, we’ll be glad to talk loopholes,” House Majority Leader Eric Cantor (R-VA) told reporters at a Wednesday Capitol briefing. “But, listen, we are not for any proposal that increases taxes, and any type of discussion should be coupled with offsetting tax cuts somewhere else.”
So rigid are Republicans on this score that Senate Democrats plan to force a symbolic vote Thursday, asking whether wealthier Americans should have to contribute to deficit reduction at all, in any way. The so-called “sense-of-the-Senate” resolution is a clever gambit — a theatrical bid to illustrate the point that Republicans don’t really want shared sacrifice if “shared” includes rich people.
But the outcome won’t clarify whether Republicans do in fact see other ways for well-off Americans to help reduce the national debt short of increasing their tax burden. So we put that question to several high-profile Republican senators. Their answers are best summed up in the form of another question: What more do you want them to do?“Millionaires can contribute to deficit reduction by spending part of their millions,” said Sen. John McCain (R-AZ). “I agree with the Wall Street Journal editorial this morning: We should cut the corporate income tax from 35 to 25, and close loopholes that are in, and make sure that everything is revenue neutral, and that is a great approach.”
This view is widely held in the Republican party — that the best thing Congress can do to squeeze more out of the wealthy is either to leave them alone, or make their existing burdens somewhat easier to manage.
“Create jobs, hire more people that pay more taxes, grow the economy, stay in America, don’t leave, hire people — that’s how millionaires can help, is create more workers, and if you raise taxes you’re gonna make it harder to keep the job you got,” explained Sen. Lindsey Graham (R-SC).
Sen Jon Kyl (R-AZ) — the Minority Whip, and a top GOP debt ceiling negotiator — did identify one distinct Republican plan for spreading the sacrifice to the upper classes. But it’s a proposal that doesn’t raise a whole lot of money, and one that Democrats reject broadly as a recipe for undermining popular entitlement programs.
“In the negotiations — I’ll give you one little glimmer of something,” Kyl hinted. “The subject of means testing has come up. Republicans have actually proposed that. We have proposed that wealthier people should either pay more for benefits, or they should not get as much in the way of benefits of others. That’s another way that they sacrifice. This is something that we have proposed, and the other side has generally not been willing to consider.”
If Congress went this route — and genuinely isolated further means testing to truly wealthy people — the savings would be small relative to the multi-trillion dollar goal Republicans and Democrats are working toward. Still, that’s about all Kyl’s willing to give up.
“The top 10 percent of the people in this country pay 70 percent of the taxes,” Kyl said. “So when you talk about shared sacrifice, my question is how much do you want that top 10 percent to pay? How much more? 80 percent? 90 percent?”
I think we’ve been very forthcoming about ways that wealthy people can do even more, but I would still ask the question how much more do you want them to do when they’re doing the bulk of the revenue raising in the country as it is.
Kyl’s caucus leader, Mitch McConnell (R-KY) was unable to identify a single specific concession he’d ask of wealthy people.
“Everybody’s going to have to contribute to it in one way or another,” he said. “We have a debt as big as our economy. We look a lot like Greece already. And it’s going to have to have broad impact on every aspect of our society in order to get this problem under control.”
Democrats are hoping the optics here become untenable for the GOP quickly, leaving the parties enough time to write and debate a bill to raise the debt limit and ward off a debt default. If they don’t, the unfathomable consequences — however unintended — might actually be shared pretty broadly.
Additional reporting by Igor Bobic