President Obama met with House and Senate Republicans this week to discuss the economy and other priorities, but the cordial meetings revealed the two sides don’t even agree on the definition of reform much less how to achieve it.
Illinois Rep. Peter Roskam is the chief deputy whip for the House GOP. He says Republicans and President Obama have very different ideas of what tax reform should look like and even why it should be done.
“The president has chosen to redefine tax reform. Traditionally, the common understanding of tax reform is that you close loopholes in an effort to drive rates down. By closing loopholes, you use that to pay for lower rates and a simpler tax code for everybody else,” said Roskam. “The president has chosen to define it as closing loopholes and using that as a vehicle to pay for more spending. And in light of that, the definitions of these things become very, very, very important.”
Roskam says the president was well-received but House Republicans made it crystal clear to Obama that “revenues” were not on the table since he got major tax hikes through the new health care laws and through the deal on New Year’s Day that addressed the so-called fiscal cliff. For his part, Obama reiterated his demand for a “balanced approach” consisting of tax increases and spending reductions.
Obama has mentioned at times that he would like to lower the corporate tax rate. Roskam says that would be fine but it needs to be part of reform across the board.
“It’s one thing to talk about reforming the corporate tax code and it’s another thing to make sure that we do it in totality with the individual tax rate,” said Roskam. “What you don’t want to do is move forward into an environment where the small businesses in and around the country that are paying at the individual tax rate are left holding the bag for a larger tax reform deal.”
Both the House Republicans and Senate Democrats released budget blueprints for Fiscal 2014. The GOP plan balances the budget by slowing the rate of spending growth, reforming entitlements and assuming comprehensive tax reform and the repeal of Obamacare.
On entitlements, Roskam says the Paul Ryan budget still keeps the system the same for Americans 55 years and older but will allow other options for health coverage starting in 2024. He also says the GOP favors means testing on both Medicare and Social Security, with poorer people getting more federal aid and wealthier seniors getting less.
Roskam admits the Obamacare repeal may be politically difficult but that doesn’t change the point of the budget blueprint.
“Remember that budgets are aspirational documents. They describe a vision and the vision for House Republicans says that because of the cost of Obamacare, we propose to repeal it,” he said.
Roskam expressed disappointment with Obama’s contention this week that there is no immediate debt crisis.
“He seems very cavalier about this debt question and the Senate Democrats sort of fulfill that in saying that they want to vote and have an additional trillion dollars in new taxes that would be foisted upon the U.S. economy,” said Roskam.
Given the very different budget priorities, finding much common ground to improve our economy and lower deficit spending seems like a tall order. Roskam his advice on where the two parties can come together.
“The common ground will be around areas that have to do with an export agenda, trying to remove trade barriers so that we can sell more exports abroad. But what it all comes down to it, we need the spending fever in Washington to break and we’ve got to break this fever so that the country can get some relief. If the only relief for the Democratic Party is to go back to the taxpayers about every eight weeks, then heaven help us,” said Roskam.
