Obama still demanding GOP submit on higher tax rates

Neil Munro White House Correspondent
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One day after he instantly rejected a GOP offer, President Barack Obama upped his “fiscal cliff” demand that Republicans formally agree that tax rates must be raised.

“What I’m going to need… is an acknowledgment that folks like me can afford to pay a little bit higher rate,” Obama told a Bloomberg TV interviewer Tuesday.

“The issue right now that’s relevant is the acknowledgment that … we’re going to have to see the rates on the top two percent go up,” Obama said.

The insistence that Republicans break their shared ideological commitment against tax-rate increases has prompted an increasing number of GOP advocates to conclude that the president is seeking a political victory for 2014, not an economic deal that helps the economy in 2013.

Obama likely bolstered that judgment during Bloomberg interview, when he said that Republican opposition to higher spending and debt amounts to “a lot of silly games played up on Capitol Hill,” he said.

Obama and the GOP are facing the so-called “fiscal cliff,” which arrives early January when long-planned spending cuts and tax increases will begin extracting $500 billion from the economy by the end of the year. The reverse-stimulus is expected to increase unemployment and perhaps shove the economy back into a recession.

On Monday, the Republican leadership in the House sent a proposed fix to Obama offering rollbacks in tax deductions and loopholes that would raise $800 billion over 10 years.

That measure would increase taxes on wealthy Americans — including many employers — without formally violating the GOP’s decades-old anti-tax plank. (RELATED: Harry Reid blames tea party for lack of deal)

The proposal also sought to cut $300 billion from agencies’ spending, and $900 billion from mandatory spending, such as entitlements.

Obama aides publicly dismissed the GOP’s offer two hours after getting it.

On Dec. 4, Obama’s spokesman Jay Carney called it “magic beans and fairy dust.”

Obama used his Bloomberg interview to broadcast the same rejectionist message, and to demand the Republicans submit to his demand for higher taxes.

“You know, there’s been a lot of talk that somehow we can raise $800 billion or $1 trillion worth of revenue just by closing loopholes and deductions, but … the only way to do that would be if you completely eliminated, for example, charitable deductions,” he said.

“If you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse,” he said.

However, the GOP proposals call for caps on deductions, including home-mortgage deductions and charitable deductions, avoiding any impact on small-sized and medium-sized donations by at least 80 percent of Americans.

“When you look at how much revenue you can actually raise by closing loopholes and deductions, it’s probably in the range of $300 billion to $400 billion,” Obama said.

Obama also said he did not want to debate tax reform until late 2013.

That’s a problem for negotiations, because Republicans say they can raise federal tax revenues — without raising tax rates — by revamping the tax code.

Obama’s proposed delay of the tax revamp to late 2013 is effectively a rejection, because that is when politicians and various constituencies are gearing up for the 2014 election.

Few politicians will begin a tax revamp — which risks angering their local supporters, donors and national advocacy groups — shortly before an election.

The GOP proposal followed an Obama demand that taxes be raised by $1.6 trillion over 10 years. The Obama proposal did not offer spending cuts, only an agreement to talk about spending cuts in late 2013, just as the 2014 midterm election is beginning.

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