House Republicans are locked in a debate over what they should demand from President Obama for hiking the $16.4 trillion debt ceiling.
The GOP conference will meet May 15 to discuss the idea of linking tax reform to the debt limit, but early indications suggest that would be a tough sell with many in the party’s rank and file.
Conservatives in the GOP conference say they are evaluating debt-ceiling proposals against a deal they struck with Speaker John Boehner (R-Ohio) and his lieutenants during the annual retreat in January. That deal says increases in the debt ceiling will only come about once debt-reducing laws are enacted, they said.
Ways and Means Committee Chairman Dave Camp (R-Mich.) has discussed developing a plan that would fast-track a rewrite of the tax code and tie it to raising the debt ceiling over multiple stages.
“That would be a real tough sell for me because that’s not the deal,” Rep. Mick Mulvaney (R-S.C.) said. “It was tax reform would be tied to the debt ceiling. That doesn’t mean the House passes tax reform. It means we get tax reform.”
The problem with that stance is that finishing off a tax overhaul by October — about the time officials expect the debt limit will need to be raised — would be a monumental task. The current tax code is complex and some 4 million words long, and policymakers would be looking to exchange a slew of tax breaks for lower rates amid a lobbying bonanza.
Rep. Rob Woodall (R-Ga.) said he is comfortable with pro-growth tax reform as the request for raising the debt ceiling but a weak process would be a “non-starter.” He said Camp should aim to have the House pass a full tax reform package by October.
“I need something attached to results,” he said. “Implementing fundamental tax reform is the goal, not talking about fundamental tax reform.”
Rep. Scott Garrett (R-N.J.) said, at the very least, the triggers have to be linked to actions by the Senate and White House.
“The devil is in the details of what ‘multi-stage’ is,” he said.
For others in the GOP, spending cuts would have to be part of any deal, especially given that the 2011 debt-ceiling deal rolled back spending by more than $2 trillion.
Rep. Steve Scalise (La.), the chairman of the conservative Republican Study Committee, said that his group is formulating its own position and looking at linking ObamaCare repeal or fundamental entitlement reform to the debt ceiling along with tax reform.
“RSC has been having listening sessions amongst members, and there are a lot of ideas floating around,” Scalise said. “I am concerned about getting real structural reforms of whether it be Medicare or ObamaCare, the things that are leading us to bankruptcy.”
Senate Republican Leader Mitch McConnell (Ky.) on Tuesday also suggested a hike to the debt ceiling must be attached to a deficit-reduction package.
“I can tell you with certainty I think it’s extremely unlikely that any Republican is going to vote to raise the debt ceiling without doing something about the debt,” said McConnell.
Those responses underscore the challenges facing GOP leaders and Camp, who likes to say he’ll follow any path to get to tax reform. Boehner has at times struggled to control the fiscal hawks in his conference and faced criticism for relying on Democratic votes on a variety of issues this year.
Republicans and Democrats also remain hugely divided over how a rewritten code should look, with Camp and GOP officials stressing that any overhaul should be revenue-neutral, meaning it would neither add nor subtract from the amount of taxes the government takes in.
“We are just starting to have our conversations with the members,” Boehner told Bloomberg Television on Tuesday about a possible link between the debt ceiling and tax reform. “Everything is on the table in terms of consideration.”
Boehner suggested spending cuts may be needed. “The president got his tax increase in January. Now is the time to get serious about solving the spending problem,” he said.
Top Democrats say tax reform should raise new revenue to reduce the deficit.
Following the protracted 2011 debt-ceiling debate, Democrats also continue to say they won’t negotiate again, and Rep. Sandy Levin (D-Mich.) said that trying to force tax reform into a debt-limit deal could poison the well on the issue.
“I think it hitches to tax reform something that will make it more difficult, not less,” Levin, the top Democrat on the Ways and Means Committee, told reporters on Tuesday. “They’re not related, and it isn’t helpful because Democrats are unwilling to bargain on the debt ceiling.”
Rep. Paul Ryan (R-Wis.), one of the GOP’s leaders on fiscal issues, stopped short on Tuesday of committing to the idea of fast-tracking tax reform in exchange for raising the debt ceiling. But the House Budget Committee chairman did signal that tax reform is a bigger priority than major spending cuts right now.
“I want to get tax reform. I am open to different ideas on how to get that done,” he said of the debt-ceiling link. “It is not in my best interest to say what I would or would not do.”
Ryan added that a deficit “grand bargain” is not going to happen this year because Democrats have rejected a massive overhaul of federal entitlement programs. But, Ryan said, tax reform is “something we are very serious about.”
Even some of the GOP’s most fervent backers of tax reform were skeptical it was enough of a demand to hike the debt ceiling.
Rep. Kevin Brady (R-Texas) said that, while he thought tax reform would be appealing to Republicans, “the biggest challenge we face in the country is how we save Social Security and Medicare.”
“We want tax reform. Because we know to get to balance, you need growth,” added Rep. Jim Jordan (Ohio), a former RSC chairman. “So I get that. But we’ve got to figure out what’s the best package.”