US Rep Cantor Spells Out Possible Tax Compromise

by
July 7, 2011

By Sean Lengell-The Washington Times

A day ahead of a meeting between President Obama and congressional leaders to discuss raising the nation’s debt ceiling, House Majority Leader Eric Cantor on Wednesday said he would be willing to accept ending some tax breaks as part of a compromise.

But the Virginia Republican said that closing any tax loopholes must be offset with spending cuts elsewhere, an offer rebutted by a key Senate Democrat.

“I have said from day one, we are not for tax hikes on the American people or businesses, and if the president wants to talk loopholes, we’ll be glad to talk loopholes,” Mr. Cantor said during his weekly briefing with reporters at the Capitol.

“We are not for any proposal that increases taxes, and any type of discussion [regarding loopholes] should be coupled with offsetting tax cuts somewhere else.”

Mr. Cantor wouldn’t say what kind of loopholes he would target. Yet his comments were noteworthy because he previously had suggested he wouldn’t support closing tax loopholes as part of an agreement to raise the nation’s $14.3 trillion debt ceiling.

But Democrats insist that any revenue earned through ending tax breaks be used to pay down the nation’s debt.

“If Republicans are going say we can only close these loopholes in a revenue-neutral way, it is like taking one step forward and then two steps back,” said Sen. Charles E. Schumer, New York Democrat. “The point isn’t to get rid of these loopholes simply to pay for new tax breaks elsewhere, it’s to do it in a way that contributes to the reduction of the debt.”

All sides of the debate stress a need to increase the nation’s debt ceiling — the legal limit the federal government can borrow to pay for its operations and debt obligations.

Exceeding the limit could lead to a U.S. default on its loans, a scenario that would damage the nation’s credit rating and trigger another financial crisis.

Time is slipping away for getting a deal worked out. Treasury Secretary Timothy F. Geithner says the debt limit must be increased by Aug. 2 or the government risks defaulting on its loans, a scenario he says could trigger another financial crisis.

Republican leaders, pressed by a large contingent of tea party-backed members, have demanded that any deal include spending cuts to equal the amount the ceiling is raised — at least $2 trillion.

Mr. Obama on Wednesday reiterated the Democrats’ position that any deal include ending certain tax breaks for wealthy corporations. He also wants more than just a $2 trillion drop in the deficit.

“The debt ceiling should not be something that is used as a gun against the heads of the American people to extract tax breaks for corporate jets owners or oil and gas companies that are making billions of dollars,” the president said during an online “town hall” event on the Twitter social network.

 

 

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