(Bloomberg News) Republican congressional leaders are ruling out tax increases or a wider revenue base in talks on extending the U.S. government's borrowing authority, creating a conflict with Democrats who would raise more money as well as cut spending.
House Speaker John Boehner staked out the Republican position by telling the Economic Club of New York that "raising taxes is off the table" because "it will have a devastating impact on our economy." Boehner predicted that Congress would act on a broader revision of the tax code in the next two years, though he said that Republicans wouldn't support it "as a way of increasing taxes on the American people or enterprises."
Boehner's comments last night came two days after the Senate's No. 2 Republican, Jon Kyl of Arizona, said a tax-code overhaul should be kept "totally off the table" of the debt-limit talks because eliminating tax deductions and exclusions to raise more revenue would be tantamount to raising taxes.
Meantime, the Democratic chairman of the Senate Budget Committee, Kent Conrad of North Dakota, said any plan to reduce long-term government debt must include tax increases along with spending cuts. A "credible plan" to reduce the debt cannot be "just on the spending side of the equation," he told reporters in Washington yesterday.
Addressing an audience of Wall Street leaders, Boehner said that "without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase." Spending cuts "should be greater" than the amount of the "increase in debt authority" given to President Barack Obama, he said.
'Draconian' Spending Cuts
During a question-and-answer session following his remarks, Boehner acknowledged the accuracy of Blackstone Group LP co-founder Peter G. Peterson's characterization of the spending cuts proposed by House Republicans. "You're right, they are draconian," he said.
That's because without Democratic support for overhauling Medicare, Medicaid and Social Security, deeper cuts are required elsewhere, Boehner said.
Boehner, Kyl and other Republican leaders say the House-passed plan to privatize Medicare for future recipients--those now younger than age 55--won't be part of a bargain on the debt limit.
Spending cuts, not tax increases, are the only option to reduce the debt because "raising taxes will hurt our economy," Boehner, an Ohio Republican, said. "We do not have a revenue problem; we have a spending problem. Let's address the spending problem."
Stimulus And Jobs
He said the 2009 stimulus program "hampered job creation in our country" even with promises that "it would create millions of new jobs."