July 13, 2020

House Votes to Temporarily End Debt Ceiling

The 285-144 vote staved off an impasse that could have put the full faith and credit of the United States government into doubt and potentially set off an economic disaster. Instead, the next Republican showdown with the president will come in March, when the subject will be across-the-board spending cuts first and a possible government shutdown by the end of the month.

“We know with certainty that a debt crisis is coming to America. It’s not a question of if. It’s a question of when,” Representative Paul D. Ryan of Wisconsin, the Republicans’ vice-presidential nominee last year and current Budget Committee chairman, said as he vowed to press ahead with deep spending cuts.

To give House Republicans a rationale for giving in on the debt ceiling after dropping demands for offsetting cuts, the House legislation included a provision that would withhold the pay of lawmakers in a chamber of Congress that fails to pass a budget blueprint by April 15.

That allowed House Republicans to turn a spotlight on Senate Democrats, who have not passed a detailed budget blueprint since 2009.

“It took one week in which their paychecks were on the line, and now the Senate is going to step up and do the right thing,” Representative Eric Cantor of Virginia, the House majority leader, said after the vote.

Senate Democratic leaders shrugged off the dictate as an insignificant gimmick and claimed victory.

“The president stared down the Republicans. They blinked,” said Senator Charles E. Schumer, Democrat of New York.

Senator Harry Reid of Nevada, the majority leader, thanked Speaker John A. Boehner for reversing course and said he would take up and pass the House bill without changes as soon as next week, possibly by unanimous consent. He said he would then move quickly on a budget plan for the first time since 2009.

“Democrats are eager to contrast our pro-growth, pro-middle-class budget priorities with the House Republicans’ Ryan budget that would end Medicare as we know it, gut investments in jobs and programs middle-class families depend on, and cut taxes for the wealthiest Americans and biggest corporations,” said Senator Patty Murray of Washington, the chairwoman of the Senate Budget Committee.

House Republicans appeared eager for that fight. For two years, the House has passed detailed but nonbinding budget plans that would cut domestic programs to levels not seen since World War II, enact changes to Medicare that would offer older people fixed subsidies to buy private health insurance, and mandate a much-simplified tax code. Democrats have criticized those plans, declined to produce an alternative, and instead demanded what they called a “balanced approach” to deficit reduction.

Now, Republicans said, the debate will be over numbers.

“We have a budget that’s described as draconian, that decimates this program or that. They have a phrase, ‘balanced approach,’ ” said Representative Trey Gowdy, Republican of South Carolina. “I’m tired of debating against a phrase.”

The debt ceiling legislation — devised with awareness of the constitutional hurdles imposed by the 27th Amendment on Congressional pay — would impound lawmaker salaries until a budget is passed or the 113th Congress ends, whichever comes first. And it would not require the House and the Senate to come to a compromise on the two spending and tax blueprints, which are likely to be very different. That will be the really difficult task.

House Democratic leaders tried to persuade their members to vote against the deal, so as to force as many Republicans as possible to vote to do something most said they would never do: lift the debt ceiling. But 86 Democrats voted yes, more than enough to let 33 Republicans vote no without bringing the bill down and handing Republican leaders an embarrassing defeat.

House Republicans say punting the debt ceiling to May 18 is not so much a retreat as a “re-sequencing” of the coming budget showdowns. House Republicans now take for granted that the first deadline, March 1, will come and go, and $110 billion in across-the-board spending cuts to military and domestic programs — known as a sequester — will go into force.

“The sequester is going to go into effect on March 1 unless there are cuts and reforms that get us on a plan to balance the budget over the next 10 years. It’s as simple as that,” Mr. Boehner said.

The next real showdown will come by March 27, when the stopgap measure financing the government expires. Republicans have made clear that they are willing to let the government shut down at that time to force deep spending cuts or changes to Medicare and Social Security that would bring down deficits in the long run.

Such continuing brinkmanship brought a rebuke from Ms. Murray, who said Republicans were trying to have it both ways, forcing Senate Democrats to move forward in an orderly way with a budget plan by mid-April, but threatening the next budget crisis weeks before that.

The pay provision brought its own protests. Representative Jerrold Nadler, Democrat of New York, called it “institutionalized bribery,” since it effectively says, do what Republicans want or do not get paid. That was why the nation passed the 27th Amendment, which says Congressional pay cannot be varied within a single Congress.

Article source: http://www.nytimes.com/2013/01/24/us/politics/house-passes-3-month-extension-of-debt-limit.html?partner=rss&emc=rss

Senate Democrats to Try Again on Payroll-Tax Cut

With Republican and Democratic leaders deadlocked over the issue in both chambers, two senators offered a bipartisan compromise that they said could help break the impasse before Congress adjourns for the year.

The proposal, devised by Senators Susan Collins, Republican of Maine, and Claire McCaskill, Democrat of Missouri, would extend the current payroll tax cut for employees and reduce the employer’s share of the payroll tax as well. It would also provide additional money for highways, bridges and other job-creating transportation projects.

It would offset the cost with a 2 percent surtax on income in excess of $1 million a year, but would carve out protection for many small-business owners who report business income on their personal tax returns.

“One of the primary objections to a surtax on very wealthy people has been its impact on small business,” said Ms. Collins, the only Republican who crossed the aisle and voted to take up the Democrats’ payroll tax bill last week. “That concern resonated with me. The fact that we have been able, in a bipartisan way, to come up with a means of protecting small businesses is potentially a breakthrough.”

Mrs. McCaskill said the fact of a bipartisan agreement on the explosive issue of taxes was remarkable — “a huge part of the battle right now.”

Democrats have never gotten more than 51 votes for their job and tax proposals, 9 short of the number needed to overcome procedural hurdles in the Senate. But they have put Republicans on the defensive, casting them as responsible for the possibility of a tax increase that could affect 160 million workers in January.

Mr. Obama tried to emphasize the political advantage at a White House news conference, saying a typical family would see a tax increase of about $1,000 next year in the absence of action by Congress.

“When the Republicans took over the House at the beginning of this year, they explicitly changed the rules to say that tax cuts don’t have to be paid for,” Mr. Obama said, striking a consciously puzzled tone. “So forgive me a little bit of confusion when I hear folks insisting on tax cuts being paid for.”

The Senate majority leader, Harry Reid of Nevada, and Senator Bob Casey of Pennsylvania unveiled the latest version of the Democrats’ proposal on Monday.

Senate Democrats scrapped Mr. Obama’s proposal to halve the payroll tax paid by employers. They kept his proposal to reduce the employee’s share — the tax paid by employees — to 3.1 percent of wages, from the current 4.2 percent. If Congress does nothing, the rate will revert to 6.2 percent in January.

The price tag for the bill was reduced by about one-third, to $185 billion from $265 billion, under the Democratic measure rejected by the Senate last week.

Democrats would make up for most of the lost revenue by imposing a surtax of 1.9 percent, starting in 2013, on modified adjusted gross income in excess of $1 million.

Senator Jon Kyl of Arizona, the No. 2 Senate Republican, denounced Mr. Reid’s proposal for its continuation of the payroll tax holiday.

“There’s no evidence that this temporary tax cut has actually produced any new jobs, which is the whole idea,” Mr. Kyl said, adding: “The surtax is, in reality, a new tax that primarily hits small-business owners. That’s who creates the jobs.”

The bill drafted by Ms. Collins and Mrs. McCaskill is meant to address that concern.

The future of the payroll tax cut is up in the air because of turmoil in Republican ranks. Mr. Kyl was one of 26 Republican senators who voted last week against a payroll tax cut bill drafted by party leaders. A similar proposal from House Republican leaders has encountered more resistance than expected from rank-and-file members of the party caucus.

The “millionaires’ tax,” in any form, is a nonstarter with many Republicans in Congress.

But Jenni R. LeCompte, a spokeswoman for the Treasury Department, said the proposed surtax “would affect only a very, very small number of small-business owners.”

“Only one percent of all small-business owners have adjusted gross income over $1 million and would be affected by this surcharge,” Ms. LeCompte said, citing a new study by Treasury’s Office of Tax Analysis.

The White House has decided that this is a week for the president to step up his campaign for an extension of the tax cut and jobless benefits, which begin to run out early next year for some of the long-term unemployed.

Ashley Parker contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=1917d298dcaf20967f1e0b61a226fcd0

Push for Broad Budget Deal Intensifies Among Leaders

The White House suggested for the first time that Mr. Obama might be willing to agree to extend by a few days the Aug. 2 deadline for legislation to increase the government’s debt ceiling if a deal was in sight, stepping up the pressure on the two parties to come to terms.

Mr. Obama met separately at the White House with Republican and Democratic leaders. But neither side reported any substantive progress as they searched for a formula that would include deep spending cuts, cost-saving changes to entitlement programs and an overhaul of the tax code that would increase revenues by closing certain tax breaks and eliminating deductions but also lower some tax rates.

Politically, the main question remained whether House Republicans would be willing to negotiate over any package that could be construed as raising taxes, and throughout the day there were signs of internal debate among party leaders.

Speaker John A. Boehner has shown continued interest in a deal if it can be done in a way that emphasizes lower tax rates.

But Representative Eric Cantor, the No. 2 Republican, and others like Representative Paul D. Ryan of Wisconsin, the Budget Committee chairman, warned that the most specific proposal to be made public so far — and the one that has done the most to reopen the possibility of a bipartisan accord — relied far too much for them on higher revenues to cut projected deficits.

That plan is the one put forward Tuesday by the so-called Gang of Six, a bipartisan group of senators who worked for months to reach an agreement and whose work was lauded by Mr. Obama as a sign that a deal was possible. The plan included a net increase in government revenue of about $1 trillion over a decade.

“I am concerned with the Gang of Six’s revenue target,” Mr. Cantor said.

Deepening the impasse was growing opposition among House Republicans to a fallback position developed by Senator Mitch McConnell, the Republican minority leader, that would allow the debt ceiling to be raised without any support from Republicans but also would not impose the dollar-for-dollar cuts in spending that have been central to the party’s negotiating position.

With no other good alternative in sight other than missing the Aug. 2 deadline and risking a default on United States government debt, some Republicans appeared more willing to consider a deal that would give them the deep spending cuts they have sought. Conservatives have been increasingly divided over how far to go in sticking to their no-taxes principles if it means walking away from progress toward restraining the growth of government.

At the White House, officials mixed signs of encouragement with concern that time is running out to avert a full-scale crisis.

“There is still time to do something significant if all parties are willing to compromise, because the parameters of what that might look like are well known, especially to the participants in the negotiations the president oversaw last week,” said Jay Carney, the White House spokesman, who later limited any extension to a matter of days.

With an eye on the calendar, the president summoned leaders of both parties to build on Tuesday’s release of the $3.7 trillion deficit-cutting plan by the Senate’s Gang of Six.

Administration officials saw that plan as evidence there was some bipartisan consensus to cut spending, reshape entitlement programs like Medicare and call for a future tax overhaul, slicing trillions of dollars from projected deficits over the next decade.

The four top House leaders — Mr. Boehner, Mr. Cantor; Representative Nancy Pelosi of California, the Democratic leader; and Representative Steny H. Hoyer of Maryland, the No. 2 Democrat — met privately Wednesday and, according to officials, reviewed problems with the McConnell plan. Putting it in place would require some House Republicans to back it, and the idea has met with heated resistance in the House even as a last-ditch effort.

Such talks between the party leaders in the House are rare given the polarized relations in that chamber and reflect the recognition that the Republican majority cannot pass the increase in the debt limit without a significant number of votes from Democrats.

Article source: http://feeds.nytimes.com/click.phdo?i=645921e79e6a5bff22f2fa5e0c21d921