Congressional GOP in Opposition of Payroll Tax Cut Extension

Jupiterimages/Thinkstock(WASHINGTON) --  President Obama wants to extend payroll tax cuts for another year.  But Republicans in Congress, despite the usual support for tax relief, are rejecting the idea.

The tax cut extension would reduce worker's taxes paid into Social Security this year from 6.2 percent to 4.2 percent, according to The New York Times.  But a spokesman for House majority leader Rep. Eric Cantor, R-Va., says the congressman believes there are other ways to generate job growth.

"All tax relief is not created equal," Cantor spokesman, Brad Dayspring, tells the Times.  "If the goal is job creation, Leader Cantor has long believed that there are better ways to grow the economy and create jobs than temporary payroll tax relief."

As lawmakers debated the various solutions to the nation's debt trouble, Republicans firmly maintained they would not stand for a proposed tax increase.  But New York Democratic Senator Charles Schumer told the Times that Republican opposition to an extension on payroll tax cuts would indicate the GOP is "for tax cuts for the rich but not for the middle class."

Economist seem to be divided on the matter, but the Times reports the proposed tax cut extension could become a key bargaining point within the super committee appointed to reduce the U.S. deficit by $1.5 trillion.  If the Senate brings it to a vote, Republicans could be forced to choose for or against lower tax rates.

Copyright 2011 ABC News Radio

Romney Defends 'Corporations Are People' Remark

TIM SLOAN/AFP/Getty Images(KEENE, N.H.) -- Former Massachusetts Gov. Mitt Romney is proving that he won't shy away from the tough questions.

Campaigning in Keene, New Hampshire Wednesday, Romney was asked about a statement he made at the Iowa State Fair two weeks ago about how taxes shouldn't be raised on businesses because "corporations are people."

That elicited an angry reaction from a small group at the fair, which turned into a shouting match between them and Romney, a candidate for the 2012 GOP presidential nomination.

When asked Wednesday if he was sticking to his opinion that "corporations are people," Romney wouldn't back down, explaining, "when you say tax corporations, the steel and the vinyl and the concrete, those things don’t pay taxes.  Only people do.  So high taxes on corporations is high taxes on people, and people are going to go places where taxes aren’t too high."

Romney was also asked about whether he'd keep the current national healthcare law, since he signed a similar measure in Massachusetts while governor there.

While defending the law to cover Massachusetts residents as the right thing to do, Romney responded, "I will oppose Obamacare, that’s number one, and on day one, I’ll direct the secretary of health and human services to grant a waiver to all 50 states of Obamacare."

Copyright 2011 ABC News Radio

GOP Leader Accuses Obama of Fostering Class Warfare

Win McNamee/Getty Images(WASHINGTON) -- Congress may be in recess but that doesn't mean Republicans aren't hearing President Obama accuse them of putting "party ahead of country."

With Obama planning to outline his proposals for creating jobs after Labor Day, GOP lawmakers are gearing up for more battles with the White House on how to best improve the sputtering economy.

Meanwhile, House Majority Leader Eric Cantor is firing back at the president for suggesting Republicans are trying to sabotage his attempts at putting Americans back to work in order to appeal to the far right and Tea Party.

In an op-ed appearing in The Washington Post, Cantor says that Obama's demand to end Bush-era tax cuts is "fueled by efforts to incite class warfare" because he wants tax breaks ended for individuals earning $200,000 or more and small businesses that make over $250,000.

The Virginia Congressman alleges the president is trying to make a clear divide between the financially well-off and the rest of America in an effort to "permanently increase the size of government."

Cantor goes on to say that Obama is the real hindrance to lowering the deficit and balancing the budget, calling him inflexible and an obstructionist.

The House Majority Whip contends that although the president is aware of the pending insolvency of Social Security, Medicare and Medicaid, he won't touch these entitlement programs even if Republicans agree to raise revenues by increasing taxes.

According to Cantor, "We have found President Obama to be an unwilling partner when it comes to getting America’s fiscal house in order."

Copyright 2011 ABC News Radio

Taxes: Michele Bachmann vs. Warren Buffett

Win McNamee/Getty Images(GREENVILLE, S.C.) -- Michele Bachmann rejected Warren Buffett’s plea for the wealthy to pay more in taxes.

“We also believe, unlike Warren Buffett, that taxes are high enough already,” said Bachmann at a campaign event in South Carolina.

Buffett’s argument was that because of lower rates on certain types of income, like capital gains made in the stock market, he pays a far lower tax rate -- percentage of his annual income -- than his secretary.

“I have a suggestion. Mr. Buffett, write a big check today," said Bachmann. "There’s nothing you have to wait for. As a matter of fact the president has redefined millionaires and billionaires as any company that makes over $200,000 a year. That’s his definition of a millionaire and billionaire. So perhaps Mr. Buffett would like to give away his entire fortune above $200,000. That’s what you want to do? Have at it. Give it to the federal government. But don’t ask the rest of us to have our taxes increased because you want to have a soundbite. We want to have real job creation in this country and that’s what we’ll stand for as fiscal conservatives.”

Bachmann’s own soundbite is not entirely accurate. Buffett did not suggest no one could make more than $200,000. President Obama has said he wants Bush-era tax cuts for those individuals making more than $200,000 and families making more than $250,000 to expire after next year. But those people would not have to hand over every dollar made over $200,000 -- just a higher percentage of that income. And, if the Bush-era tax cuts expire, they’d have to hand over a higher percentage of money made on the stock market.

She would prefer to lower tax rates for the rich and broaden the tax base, making more Americans pay tax. Currently, nearly half of Americans -- those at the lower end of the economic spectrum - do not pay income tax.

The president during the debt ceiling debate also endorsed closing tax loopholes that benefit corporate jet owners and others.

But the White House is betting that Americans won’t mind some tax hikes if it can help close the budget gap, as the president’s top campaign adviser told ABC News' George Stephanopoulos after Republican presidential candidates all said last week they would reject even tax hikes that were offset 10-1 by spending cuts.

Buffett caused a stir with the argument, published in The New York Times, that the rich should pay more in taxes. And he’s trying to influence the “super committee” of lawmakers tasked by Congress with suggesting a solution for the nation’s deficit woes.

Copyright 2011 ABC News Radio

With Rick Perry in Race, Which Governor Has the Best Record?

Justin Sullivan/Getty Images(WASHINGTON) -- Rick Perry's entrance to the presidential field means a fourth sitting or former governor has entered the field. The nine announced GOP presidential candidates run the gamut when it comes to their political backgrounds. Three served in the U.S. House, one served in the Senate, one has never held elected office.

Governors can tout their executive experience, which voters in recent years have responded well to. Recent presidents Ronald Reagan, George W. Bush, and Bill Clinton were governors before entering the White House.

The newest addition to the ever-expanding circle of presidential contenders is Texas Gov. Perry, the longest-serving governor in state history. For Perry, who will officially announce his presidential bid on Saturday, accomplishment No. 1 is job creation.

Over the past year, Texas' job growth was twice the national average. In fact, of all the jobs created since June 2009, 30 percent—about 295,000 jobs—were created in Texas, according to a report from the Dallas Federal Reserve which analyzed data from the Bureau of Labor Statistics.

Mine Yucel, vice president and senior economist at the Dallas Federal Reserve, said much of this job growth can be attributed to Texas' low tax rate—the state has no income tax—few regulations and a law limiting tort litigation. Texas, according to Perry, is the "epicenter of growth."

But Lis Smith, spokeswoman for the Democratic Governors Association, said Texas's lower unemployment rates have less to do with Perry's policies and more to do with Texas's natural resources.

The Texas unemployment rate has been below the national average for his entire decade-long tenure. The most recent jobs report showed that at 8.2 percent the Texas unemployment rate was 1 percentage point lower than the national average.

"Someone had put a report out that the first state that's coming out of the recession is going to be the state of Texas ... I said, 'We're in one?'" Perry said in September 2009.

Still, 25 states had a lower unemployment rate in June 2011 than Texas, including Pawlenty's state of Minnesota in which 6.7 percent of the population is unemployed—dropping off from its peak of 8.3 percent in 2010.

Pawlenty took office in 2003 when the state's budget was facing a $2 billion shortfall. Within his first year as governor Moody's rating agency downgraded Minnesota from a perfect AAA credit rating to AA1, one step lower, citing short-term fixes to long-term budget woes as the reason for the downgrade.

"Pawlenty came in with a structural deficit and he basically managed that structural deficit but never solved it," said Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota.

Jacobs said a combination of lagging revenues because of the recession and Pawlenty's staunch opposition to raising taxes led to the $5 billion projected budget deficit for the next biennium that Pawlenty left to his successor when he departed office in January 2011.

Conversely, during Massachusetts Gov. Mitt Romney's tenure from 2003 to 2007, he petitioned the S&P credit rating agency to increase his state's credit rating from AA- to AA, which they did in 2005, according to a report obtained by Politico.

"Over the last few years, Massachusetts has taken certain actions that have reduced budget uncertainty, reined in spending, and prudently managed resources during a difficult national economic slowdown," Standard & Poor's said in the March 2005 report according to Politico.

But the credit upgrade did not come without a cost. In 2002 Massachusetts raised more than $1 billion in additional tax revenue and in 2004 the state increased fees such as those for drivers' licenses, raising an additional $271 million annually, according to the report.

In Thursday night's Fox News debate, the two Minnesotans sparred over tax increases. Congresswoman Michele Bachmann attacked Pawlenty for raising cigarette taxes from 48 cents per pack to $1.50 during his tenure.

Perry has also taken heat for his tax policies. During Perry's 2010 primary battle, opponent Sen. Kay Bailey Hutchison accused the governor of raising taxes on businesses by creating a 1 percent margins tax on business receipts.

Perry countered that he had, in fact, lowered business taxes by eliminating the 4.5 percent franchise tax in favor of the lower margins tax. And while at face value the tax rate did decrease, revenue increased. According to the Austin American Statesman, revenue from the franchise tax was $5.8 billion in 2006 and 2007. But in the first two years under the margin tax revenue rose to $8.7 billion.

"I think Perry's margin tax in Texas is a destructive type of tax," said Joseph Henchman, the vice president of state projects for the Tax Foundation. "You have taxes being levied on taxes based on how many levels of production a product has. It basically encourages people to form conglomerates purely for tax reasons which is economically destructive. You have these taxes pyramiding on each other so the effective rate is higher."

In his four years has the governor of Utah from 2005 to 2009, Jon Huntsman simplified the Utah tax code by swapping a six-bracket income tax system for one 5 percent flat tax.

"Huntsman's flat tax achievement is an achievement," Henchman said. "It reduced complexity and it made it a much more growth-friendly tax system."

Henchman said former Romney is the only GOP candidate who saw income taxes decrease while he was in office, albeit slightly, from 5.6 percent when he took office in 2003 to 5.3 percent by the time he left in 2007.

Massachusetts residents have historically had a one of the highest tax burdens in the country, consistently ranking in the top 10 states, Henchman said. When Romney was in office the state dropped out of the top 10, falling from having the eighth-highest tax burden in 2005 to the 13th in 2006.

At the Iowa State Fair Thursday, Romney took questions from a rather heated audience. In response to a question about whether he would close corporate tax loopholes, Romney reiterated that he absolutely would not raise taxes.

But, then again, all of his GOP opponents say they will not raise taxes either.

Copyright 2011 ABC News Radio

Senate’s In Session, But Debt Ceiling Talks Still Stalled

JupiterImages/Thinkstock(WASHINGTON) -- As senators head back to Washington, D.C., Tuesday after their July 4 recess this week was canceled due to the remaining debt ceiling impasse, both sides remain entrenched in their positions, and the road to compromise remains unclear.

There are just 27 days until the nation goes into default, on the Aug. 2 deadline set by the Treasury Department for action to raise the nation’s $14.3 trillion debt ceiling.  The White House said last week that they’d like to see a deal reached by July 22 in order to be able to raise the limit before defaulting on August 2.

That idea has had some support in the Senate.

“The White House I think is being very wise and careful,” Sen. Chuck Schumer, D-N.Y., said last week on conference call with reporters, “They say we should not step to the edge of the cliff because we might fall off. So I think having a date in advance of August 2 to have an agreement in place makes sense.”

But so far that advanced date has done little to speed up the pace of action on Capitol Hill and with the White House, with both sides blaming the other for the stalemate.

The main obstacles facing the negotiations is a stalemate over taxes.  Republicans have been preaching that any deal must not include any added revenues. Democrats Tuesday called the Republicans' position on revenues “stubborn” and “rigid,” and called again for revenues to be considered as part of a package together with spending cuts.

After turning down Senate Minority Leader Mitch McConnell’s, R-Ky., invitation last Thursday for the president to meet directly with Senate Republicans, another invitation -- this one from Senate Democrats -- is still outstanding.

Copyright 2011 ABC News Radio

Behind the Scenes of the Deficit Negotiations

Jupiterimages/Thinkstock(WASHINGTON) -- President Obama has proposed possible tax increases that altogether total more than $400 billion over the next decade, Democratic officials with knowledge of the deficit negotiations said Thursday, with a goal of roughly $2 trillion in total reductions, most of which would be obtained by spending cuts.

But last week, Republicans participating in the talks -- Rep. Eric Cantor, R-Va., and Sen. Jon Kyl, R-Ariz. -- indicated that “we are now getting down to the crunch time” and “this would have to be kicked upstairs to the leaders” of their respective caucuses, House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky.

“There had been real progress” before that, the officials said, arguing that a framework would need to be agreed upon by mid-July in order to have the bill passed and the debt ceiling raised by Aug. 2. The officials expressed chagrin that Congress is planning on leaving on July 3 or 4 for a three-week recess.

They nonetheless said they were “very confident a deal will get done,” as one said. The U.S. government “will not default,” he said, insisting that CNBC would not be airing live a congressional vote at the last minute on the deficit package, as happened with the Greek Parliament Wednesday. The talks have been difficult, with negotiators continuously doing “vote balancing,” trying to get to 218 votes in the House and 60 votes in the Senate.

“Both caucuses have trouble with -- if it’s the right deal -- getting 100 percent of their caucuses,” one of the Democratic officials said. These talks have been different from dealing with the House Republicans over the continuing resolution to fund the government, they said. The goal for Republicans then “was to pass it with as few Democratic votes as possible…and for our side to be as unhappy as possible.” For this vote, “they know they can’t pass it without our help.”

The officials said the American people see a president willing to put everything on the table and Republicans saying “my way or the highway,” which will hurt Congress.

Increasing general tax rates was never on the table, the Democratic officials said.

Some of the proposed tax increases included:

-- $3 billion over 10 years by eliminating a tax break for corporate jet owners (which, officials noted, is not the same thing as the incentive in the stimulus bill for businesses to buy assets such as planes);
-- $20 billion from treating as regular earned income the “carried interest” hedge fund managers make;
-- $45 billion by eliminating oil and gas company subsidies;
-- $60 billion from eliminating a business tax break known as LIFO (last in/first out accounting); and
-- $290 billion from capping at 28% the amount Americans who earn more than $200,000 ($250,000 for a family) can make deductions for all itemized deductions, such as for charitable contributions or mortgages.

Have Republican negotiators ever agreed to any of these tax hikes?

No, Democrats said, though “there have been on different occasions a receptivity to a discussion -- but not a decision.”

Copyright 2011 ABC News Radio

Obama Scolds Congress, Says His Daughters Are More Disciplined

Alex Wong/Getty Images(WASHINGTON) -- In an animated rant that livened up an otherwise subdued press conference, President Obama on Wednesday lit into Congress for failing to reach an agreement to raise the country’s $14.3 trillion debt ceiling as an Aug. 2 deadline approaches, despite repeated urgings by the administration to do so. At one point he even reprimanded lawmakers by noting that his two daughters manage to do their homework ahead of time, a diligence rarely seen on gridlocked Capitol Hill.

“If the United States government for the first time cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant and unpredictable and that is not a good thing,” President Obama said of the debt ceiling debate. “We don’t know how capital markets will react, but if capital markets suddenly decide, you know what, the U.S. government doesn’t pay its bills so we’re going to start pulling our money out and the U.S. Treasury has to start to raise interest rates in order to attract more money to pay off our bills, that means higher interest rates for businesses, that means higher interest rates for consumers. So all the headwinds that we’re already experiencing in terms of recovery will get worse. That is not my opinion -- I think that’s the consensus opinion. And that means that job growth will be further stymied, it will be further hampered as a consequence of that decision.”

“These are bills that Congress ran up,” he noted. “The money’s been spent. The obligations have been made. So this is not a situation -- I think the American people have to understand this -- this is not a situation where you know, Congress is going to say, ‘Okay, we won’t buy this car or we won’t take this vacation.’ They took the vacation, they bought the car, and now they’re saying maybe we don’t have to pay or we don’t have to pay as fast as we said we were going to. That’s not how responsible families act. We’re the greatest nation on earth and we can’t act that way. So this is urgent and it needs to get settled.”

In response to suggestions by prominent Republicans like House Speaker John Boehner that the Aug. 2 deadline set by the Treasury Department was “artificial,” the president said, “Aug. 2 is a very important date and there’s no reason why we can’t get this done now. We know what the options are out there. This is not a technical problem any longer. This is the matter of Congress going ahead and biting the bullet and making some tough decisions.”

If his two daughters can do their homework with plenty of time to spare, the president then asked, why can’t Congress get their work done, too?

“You know, Malia and Sasha generally finish their homework a day ahead of time. Malia is 13 and Sasha is 10. It is impressive. They don’t wait until the night before. They’re not pulling all-nighters,” he said to laughter from the assembled press corps. “They’re 13 and 10. You know, Congress can do the same thing. If you know you’ve got to do something, just do it.”

But the president wasn’t done yet. After touting his leadership on the debt ceiling issue, pointing out that he’d met with members of Congress repeatedly in recent months, the president took some shots at the Congressional calendar that leaves lawmakers ample time to leave Washington and return to their home states and districts.

“They need to do their job. Now’s the time to go ahead and make the tough choices. That’s why they’re called leaders. And I’ve already shown that I’m willing to make decisions that are very tough and you know, give my base of voters further reason to give me a hard time, but it’s got to be done, so there’s no point in procrastinating. There’s no point in putting it off. You know, we’ve got to get this done. And if by the end of this week we have not seen substantial progress then I think members of Congress need to understand we’re going to have to start cancelling things and stay here until we get it done. They’re in one week. They’re out one week. And then they’re saying Obama’s got to step in -- you need to be here, I’ve been here, I’ve been doing Afghanistan, bin Laden, and the Greek crisis. You stay here. Let’s get it done.”

“Alright, I think you know my feelings about that,” he said with a chuckle.

Copyright 2011 ABC News Radio

Debt Ceiling Clock Ticks Down as Talks Heat Up on Capitol Hill

Comstock/Thinkstock(WASHINGTON) -- As the calendar flips closer with each day to the Aug. 2 deadline for action on the nation's debt ceiling, Tuesday's fiercely partisan rhetoric on Capitol Hill shows that members of Congress have a lot of work to do before a deal is reached, and that both sides are digging in deeper than ever.

On the Senate floor Tuesday morning, Democrats blasted Republican leaders, saying they're "more serious about politics than deficits." The proverbial fingers were pointed early Tuesday morning as Sen. Chuck Schumer, D-N.Y., called out Senate Minority Leader Mitch McConnell, R-Ky., for singlehandedly standing in the way of reform.

"The person standing in the way right now is Sen. McConnell," Schumer said on the Senate floor. "His 'my way or the highway' approach is what is standing in the way of getting an agreement."

Before Monday's meeting with President Obama at the White House, McConnell staked out a hard-line position on taxes -- saying that tax hikes should remain off the negotiating table.

"You can't be serious about deficits and at the same time recklessly jeopardize our economic standing in the world in order to protect tax breaks for the wealthiest few," Schumer said Tuesday. "Right now in America, middle-class families are living paycheck to paycheck while Sen. McConnell and his colleagues are going to the mat to protect billions in tax breaks to oil companies. "

In the negotiations, Democrats are pushing Republicans to close tax breaks for major oil and gas companies, end tax loopholes for corporate jets and impose regular income tax rates on the carried interest earned by investment fund managers.

Striking a populist theme in the Democrats' recent messaging over what the Republicans' demands represent to them, Senate Majority Leader Harry Reid, D-Nev., said that Republicans needed to put the economy ahead of politics.

"What could be worth walking away from the negotiating table? Tax breaks for wealthy oil companies and corporate jets," Reid said. "Republicans have gone to the mat for Big Oil, fighting again and again to preserve wasteful taxpayer-funded giveaways to companies that made $32 billion in profits in the first quarter of this year alone. And Republicans walked away from the negotiating table to save tax breaks for corporate jets."

McConnell said Tuesday that he is "perplexed" as to why Democrats and the White House are still discussing tax increases, and noted that the path forward "seems to be blocked by an insistence on raising taxes in the middle of an economic slowdown."

On Wednesday, the Senate Democratic leadership heads to the White House to meet with President Obama regarding the ongoing negotiations. The meeting follows Obama's one-on-one Monday reunions with Reid and McConnell, following the breakdown of Vice President Joe Biden's debt ceiling talks on the Hill last week.

The Republican leadership, aside from McConnell, have not yet received a White House invitation.

Copyright 2011 ABC News Radio

McConnell and Clyburn Call for Compromise in Budget Talks

ABC News(WASHINGTON) -- Debt-reduction talks came to a standstill last week with Republican leaders walking away from the negotiating table. But Senate Minority Leader Mitch McConnell, R-Ky. says Republicans are eager to "wrap up" budget talks.

"It need not necessarily go the 11th hour," McConnell said in an interview with ABC News This Week anchor Christiane Amanpour. "Both the democrats and the Republicans would like to come together and finish this negotiation and finish it sometime soon."

Democratic insider on the talks Assistant Minority Leader Representative James Clyburn, D-S.C., said he thought negotiations between the two sides were progressing before the breakdown.

Between $1.4 to $2 trillion of cuts were made out of the $4 trillion in reductions that are needed.

Clyburn says he's confident an agreement will be met.

"The President is meeting this week with both leaders in the Senate in separate meetings," Clyburn said. "They will come to some agreement."

McConnell stressed that both sides now need to focus on starting a productive dialogue.

"I think we need to put aside our talking points and get down to something that can actually pass," said McConnell. "The whole business of raising taxes regardless of how you go about it is something this Congress is not likely to do."

A major breakdown in talks began with issues over raising revenues, with Republicans remaining steadfast that they would not increase taxes.

But Clyburn countered saying that the tax hikes proposed would be for co-operations and cutting ethanol and oil subsidies.

"We want to close the loopholes up. We don't want to raise anybody's tax rate. That's never been on the table," said Clyburn.

A Balanced Budget Amendment to the Constitution in the Senate will go to a vote the week of July 18.

McConnell claims "all 47 Republicans in the Senate" support the amendment which could play into a vote to raise the debt ceiling before the Aug. 2 deadline.

"We think it's' important to take advantage of this opportunity to do something really important to move the country in a different direction," said McConnell.

Copyright 2011 ABC News Radio