Reid: Tea Party sway over GOP standing in way of debt deal

By Bernie Becker - 05/22/12 03:53 PM ET

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday blamed Republicans for standing in the way of a broad deficit deal, saying the Tea Party had made the GOP unreasonable about the country’s fiscal issues.

Reid, in a letter to his Republican colleagues, added that Tea Party influence was cutting off any chance of a debt deal before voters head to the polls in November.

“The American people want a balanced approach to fiscal policy that combines smart spending cuts with revenue measures that ask millionaires and big corporations to pay their fair share,” Reid wrote. “Yet a strict adherence to Tea Party ideology among Republicans in both the House and the Senate has so far put that balanced, common-sense solution out of reach.”

Democrats have for months pushed for using both spending cuts and tax increases on the wealthy to rein in deficits.

But Republicans have largely stood strong against tax hikes, and Reid said Tuesday that the GOP would have to drop that and a push to dramatically overhaul Medicare for policymakers to hammer out any deficit deal.

“Once Republicans are willing to abandon their commitment to more tax breaks for multi-millionaires and special interests and their plans to end Medicare, I am confident that we can reach an agreement,” he added.

The majority leader was responding to a letter last week from 41 GOP senators, who urged him to act quickly on extending the Bush-era tax rates and accused Democrats of dragging their feet on policies that would help the economy.

The back-and-forth between the two sides also further illustrates the hardened lines that Republicans and Democrats have on debt issues, just months before Congress faces what analysts have termed a “fiscal cliff.”

In addition to the Bush tax cuts expiring at the end of the year, the U.S. budget also faces automatic spending cuts early next year arising out of the failure of the deficit-reduction supercommittee and other fiscal issues. Analysts have said the full weight of those cuts and tax increases could send the U.S. economy back into a recession.

But with both Democrats and Republicans hoping for success in November, few expect Congress to complete its work on those tasks before the lame-duck session after the election.

Sen. Orrin Hatch (Utah), the ranking Republican on the Finance Committee, responded to Reid's letter by again calling on Senate Democrats to move quickly to extend current tax policies, saying that inaction was weighing down the economic recovery.

“President Obama and his liberal allies would prefer to put off a discussion of this fiscal cliff,” Hatch, who spearheaded last week’s GOP letter, said on the Senate floor. “I am fairly certain that their preference would be to get to the other side of the election and then have tax hikes set in not only for their caricatured evil corporations and individuals but for the middle class as well.”