WASHINGTON — Congressional Republicans’ unyielding stand against income tax increases has caught President Barack Obama and his allies off guard, resulting in the spending-cuts-only approach to deficit reduction that Democrats most wanted to avoid.
It also has dimmed hopes for broader efforts this year to start taming the costly and fast-growing “entitlement” programs of Medicare and Social Security.
The result is a new round of deficit reduction that tilts more toward Republicans’ wishes than many people would have expected after Obama won re-election with a campaign that called for higher taxes on the rich.
Democrats thought House Republicans would accept some new revenues last month to minimize military cuts and to pressure liberals to confront entitlement spending. Instead, Republicans seem more determined than ever to block tax increases on high incomes, whatever the political risk.
It’s now the overriding priority for GOP lawmakers — even if they hold a different view of payroll taxes on wage earners. With relatively little debate, Republicans and Democrats this year raised the payroll tax rate, which funds Social Security, after granting a two-year reduction.
In all, two years of budget debates have yielded laws to reduce deficits by nearly $4 trillion over 10 years, a point of pride for Republicans. About $620 billion of that will come from tax hikes made inevitable by the “fiscal cliff” legislation, resolved on Jan. 1. The rest will come from spending cuts and savings on interest.
The ratio disappoints liberals. They recall that Congress’ top Republican suggested $800 billion in new revenue, and Obama proposed $1.2 trillion or more, in “grand bargain” talks that started in 2011 but never reached fruition.
“Somehow we ended up with $600 billion,” and with no provisions to rein in entitlements, says Jim Kessler of the Democratic think tank Third Way. “It was an enormous missed opportunity.”
For House Republicans, the no-income-tax-increase stand is more doctrine than strategy. Whether lucky or strategic, however, they feel they outfoxed Obama on deficit-reduction policies this time.
When a new “fiscal cliff” law was about to raise income tax rates on nearly all U.S earners in January, GOP leaders accepted Obama’s offer to limit the increase to incomes above $450,000. It was a concession by the president, who had campaigned for a somewhat broader tax hike.
Republicans never reciprocated, however. That cleared the way last week for across-the-board “sequester” spending cuts, once considered too damaging to enact.