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Parties huddle on tax vs. spending cuts strategies

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By McClatchy Newspapers

Published: Monday, Feb. 4, 2013, 7:52 p.m.

WASHINGTON — Lawmakers for both parties will huddle separately behind closed doors starting on Tuesday, plotting strategy for the fight over how to prevent deep, across-the-board federal spending cuts scheduled to begin on March 1.

That the parties are meeting separately and sometimes far from Washington says much about their mood. About $85 billion in automatic spending cuts could take effect in 24 days as a result of sequester.

As members of Congress head for the congressional retreats — traditionally private sessions that aim to set the agenda and promote party unity — they appear headed on a path for familiar battles.

The automatic cuts are part of the 2011 debt ceiling deal, which mandates the spending reductions unless lawmakers agree otherwise. The thinking had been that they'd reach some sort of compromise because the cuts would be so politically unpalatable.

Congress passed a compromise postponing the cuts until March 1 as part of a deal that raised taxes on the richest 1 percent of Americans. Each side appears stuck in the same themes of the November elections and the New Year's deal that avoided steeper tax hikes on 99 percent of Americans.

Democrats are calling for higher taxes on big corporations and the wealthy to raise revenue and avoid deep cuts that would slow the economy. Republicans insist that the nation needs to cut spending.

On the Senate floor on Monday, Republican leader Mitch McConnell of Kentucky said, “If you were to listen to the Democrats, you'd think all of our ills could be solved by raising taxes on private jets or energy companies. These aren't real solutions. They're poll-tested gimmicks.”

Sen. Carl Levin, D-Mich., is circulating a memo among colleagues that would seek to raise revenues by closing some tax loopholes for energy companies, going after multinationals that shield their foreign earnings and doing away with a tax break that allows hedge fund owners to skirt paying ordinary income taxes on their income; it permits them to pay the lower rate at which capital gains are taxed.

Business groups don't like being targeted under Levin's plan. “Discriminatory tax increases, that certainly is not the way to solve the problem,” said Dorothy Coleman of the National Association of Manufacturers.

 

 
 


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