President Obama made the case Wednesday for moving swiftly to approve a deficit-reduction deal that includes tax increases, lawmakers in both parties plotted strategies that could make it difficult to find common ground.
Senate Republicans began a push to amend the Constitution to require a balanced budget, insisting that the government cannot get out from under crushing debt without one.
In a series of speeches on the Senate floor and a morning news conference, Republicans injected the demand into talks with the White House.
Senate Minority Leader Mitch McConnell (Ky.) characterized the amendment as a “good first step” toward achieving long-term budget stability. “We think it’s pretty clear, regardless of what we’re able to negotiate here in the short term, that we should put the federal government in this kind of fiscal straightjacket so that we do not get in this position again,” he said.
Polls show that a balanced-budget amendment is broadly popular. It is also an article of faith for much of the conservative base, and the Republicans’ emphasis on its passage may be designed to show activists that they take the issue seriously.
White House is seeking about $300 billion in new revenue over the decade, less than half the amount it sought when Obama first outlined his goals last spring, based on the proposals in negotiations.
Obama once targeted the wealthiest Americans, the top 2% who earn beyond $200,000 a year, proposing to cap their income tax deductions.
But weeks of closed-door talks have diminished that goal. Now, even a deduction cap on those Americans earning beyond $500,000 a year — just 1.3 million Americans, fewer than 1% of all taxpayers — has been dashed. The latest offer on the table would be a more limited cap, to generate an additional $130 billion.
With just a few weeks remaining to reach an agreement, Democrats now are fighting mainly for the most populist tax reforms: ending tax subsidies for oil and gas companies, eliminating a tax break for hedge fund managers, closing an ethanol loophole and changing the way businesses write off inventory, according to those familiar with the talks.
In an appeal to the sensibilities of ordinary Americans, Democrats have gone after notable tax loopholes: tax breaks for owners of corporate jets or thoroughbred race horses. Such reforms produce only modest revenue — $3 billion in the case of corporate jets — but Democrats believe they carry political value.
House Speaker John A. Boehner (R-Ohio) is aware that he will probably need Democratic votes to pass a deal, much as he did earlier this year to avert a government shutdown. That would require adding sweeteners.
The White House view is that all sides have a lot at stake over the next few days. Polls show that slightly more Americans would be inclined to blame Republicans than Democrats for the impasse. But many would blame both sides.
"At this point, you shouldn't even call it a debt ceiling debate," said Stan Collender, an author and expert on the federal budget who now blogs about the topic. "It's an impasse. And if it stays that way, it hurts everybody to some degree."
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