Hensarling Dismisses ‘Penny’ of New Revenue in Deficit Deal
Super committee Co-Chairman Rep. Jeb Hensarling (R-Texas) indicated tonight that Republicans on the panel cannot move any further on taxes, saying that “any penny” more in tax revenue would be “a step in the wrong direction.”
With one week left for the panel to find a deal, Hensarling’s characterization of the Republican position on taxes was the strongest public statement yet on the super committee’s impasse and put a slight damper on what had been an otherwise productive day. Congressional leaders had reiterated their commitment today to finding a deal and met in various combinations with one another to try to find a path to a deal.
“We have gone as far as we feel we can go on balance. We have to make sure we’re helping the economy,” Hensarling said in an interview with CNBC’s Larry Kudlow. “We put $250 billion in what is known as static revenue on the table, but only if we can bring down rates.
“Any penny of increased static revenue is a step in the wrong direction,” Hensarling continued. “We can only balance that with pro-growth reforms, and, frankly, the Democrats have never agreed [to] that, so I don’t know how many times I can tell you that that agreement is not going to happen.”
The most recent Republican offer was made last week by super committee member Sen. Pat Toomey (R-Pa.). Worth $1.2 trillion overall, it included $250 billion worth of tax code reform in exchange for making permanent the Bush-era tax cuts, extended by President Barack Obama last winter. The $250 billion in tax savings over the next decade would come from eliminating deductions in the existing code.
Democrats have said that ratio of cuts to revenues was not enough to bring them to the table, especially because the Bush tax cuts will automatically expire at the beginning of 2013. If Congress does not re-extend the cuts for the highest-earning Americans, that could bring in about $800 billion in new revenues over 10 years.
The impasse over taxes versus entitlements is neither new nor unique to the super committee: It has doomed almost every other deficit reduction group over the past year. But hope for a deal lies in how close the two parties might be able to come together in seven days, and in that regard, Hensarling’s comments were dispiriting to some.
The House Republican Conference chairman emphasized that Democrats need to make a more substantial offer on entitlements, although the formal Democratic pitch made last week included $350 billion in Medicare reform and $50 billion in Medicaid changes.
“If we can’t get any type of reforms in health care, which has helped drive the nation towards insolvency, then no, there’s no reason to frankly put any static revenues on the table,” Hensarling said. “If you can’t dent the health care problem, if you can’t dent Obamacare, if you are looking at these tax hikes, I would say … pull the trigger for the across-the-board spending cuts sequestered.”
If the super committee fails to reach a $1.2 trillion agreement by Nov. 23, then spending cuts to both defense and non-defense spending would take effect in 2013. Republicans, especially, have talked about reversing part of the “trigger” in case the panel does not reach a deal.
Sens. John McCain (R-Ariz.) and Lindsey Graham (R-S.C.) have already said they are working on legislation that would repeal the proposed defense cuts. Although Hensarling did not explicitly say that he would support rolling back the cuts and putting $1.2 trillion back toward the deficit, he did indicate that Congress could use the time before the cuts would be enacted to replace them.
“I would be committed to keeping the $1.2 [trillion],” Hensarling said. “We’ve got 13 months to find a smarter way to do it.”