12:12 pm CST - September 13, 2011
Posted under On The Record
Members of the bipartisan deficit “super committee” are on edge as President Obama calls for Congress to pass his $447 billion jobs plan, fretting that the stimulus-style proposal makes their task that much harder.
The president, who is sending his plan to Congress Monday evening, claims the bill will not add to the deficit. The White House says that over the next two weeks, Obama will spell out exactly how he intends to pay for the proposals, and then some.
But the task of offsetting the cost of the bill will ultimately fall to the bipartisan committee.
That committee already is charged with finding about $1.5 trillion in deficit savings by Thanksgiving — Obama’s bill brings their target to about $2 trillion. Though the president plans to give the committee a roadmap to reaching that larger target, Republican members expressed concern that the latest request will make it much harder to drum up enough avenues for deficit reduction in a mere two-month timeframe.
“This proposal would make the already-arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible, removing our options for deficit reduction for a plan that won’t reduce the deficit by one penny,” committee co-chairman Rep. Jeb Hensarling, R-Texas, said in a statement.
Obama, outlining how he plans to find additional savings, pointed to exactly the same targets the super committee was already looking at. The president mentioned three possible sources of money — eliminating or reducing some tax deductions, making changes in entitlements such as Medicare and Medicaid and making wealthier households pay “their fair share,” a reference to tax increases.
“It’s a balanced plan that would reduce the deficit by making additional spending cuts, by making modest adjustments to health care programs like Medicare and Medicaid, and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share,” Obama said during his address last week to a Joint Session of Congress.
Unveiling his bill in the Rose Garden Monday, he reiterated that it won’t “add a dime to the deficit.”
The super committee was already taking aim at trimming some of the $1.1 trillion in annual tax deductions, with some Democrats and Republicans in agreement. “We have to include revenues. It’s not just spending, it also is revenues,” Democratic Sen. Max Baucus, D-Mont., said.
Sen. Pat Toomey, R-Pa., said it is “indefensible” for large U.S. firms pay little or no income taxes.
But while members of both parties are looking to trim tax deductions, Republicans hoped to use some savings for deficit reduction and some to lower tax rates, which could boost economic growth and perhaps job creation. The president’s plan could siphon some of those savings away.
And the president’s call to have the wealthy pay more in taxes is part of a much larger debate over tax reform, not an easy place to pick up a few hundred billion dollars.
Obama also said last week that any spending cuts “wouldn’t happen so abruptly that they’d be a drag on our economy.”
That means Obama’s bill would likely not be paid for until later in the decade — likewise, other savings from changes to entitlements would not likely materialize until many years out. The addition of another $447 billion, then, would further exacerbate the deficit in the near-term while leaving it to future Congresses to ensure the savings are achieved in the long-term.
White House aides say their bill, called The American Jobs Act, will include budget offsets like tax changes and spending cuts, while a more complete deficit reduction plan to be released next Monday will include broader proposals.
Obama is expected to push for closing tax loopholes and other tax changes which so far have been opposed by Republicans.
Democratic National Committee Chairwoman Debbie Wasserman Schultz said Monday that the wealthy must pay more in taxes.
“That is a glaring hole in the revenue that we generate in this country, and making sure that we don’t continue to pile all the pain on those who can least afford it right now,” she told Fox News.
The plan includes several proposals aimed at spurring private-sector hiring, while cushioning the pain for those out of work. Much like the 2009 stimulus, it also includes $130 billion in state and local government aid to plug budget gaps and avert layoffs.
At the heart of the plan is a call to cut payroll taxes for individuals and businesses. It includes several other targeted tax breaks, as well as about $50 billion in unemployment aid and billions of dollars in new infrastructure spending.
Fox News’ Jim Angle contributed to this report.