Corker concedes GOP should let top tax rate go up

Sen. Bob Corker (R-Tenn.) SOURCE: U.S. Senate

Sen. Bob Corker (R-Tenn.) conceded that Republicans will “have to cave on taxes” to avert the approaching fiscal cliff. 

Corker joined his Republican Senate colleagues – Sens. Tom Coburn (R-Okla.), Olympia Snowe (R-Maine), and Susan Collins (R-Maine) – in admitting that Republicans should allow the Bush tax cuts expire for incomes exceeding $250,000 a year.

“There is a growing group of folks, that are looking at this and realizing that we don’t have a lot of cards as it relates to the tax issue before year end,” Corker said on Fox News Sunday with Chris Wallace.

Corker argued that letting the tax rates go up would shift the focus of the deficit debate back on cutting entitlement spending, particularly Medicare.

“A lot of people are putting forth a theory and I actually think it has merit where you go ahead and give the president the 2 percent increase that he is talking about, the rate increase on the top 2 percent. And all of a sudden, the shift goes back to entitlements, and all of a sudden, once you give him the right on the top 2 percent, it’s actually much lesser tax increase than what he has been talking about, the focus then shifts to entitlements and maybe it puts us in a place where we actually can do something that really saves the nation,” he explained.

Corker also reasoned that siding with the White House on taxes would give Republicans more political leverage over the debt ceiling increase, which will need to happen early next year. In 2011, Republicans used the debt limit increase – and the threat of U.S. default – to exact more than $1 trillion in spending cuts.

“Republicans know that they have the debt ceiling that’s coming up right around the corner, and, the leverage is going to shift, as soon as we get beyond this issue,” said Corker. “The leverage is going to shift to our side, where hopefully we’ll do the same thing we did last time and that is if the president wants to raise the debt limit by $2 trillion, we get $2 trillion in spending reduction.”

The fiscal cliff negotiations between Republicans and the White House have come to a standstill over taxes.

The White House has maintained that tax rates for the top 2% of income earners should revert back to the Clinton-era level of 39.6%. (The Bush tax cuts have added – and will add – trillions to the national debt.)

Republican House Speaker John Boehner, on the other hand, has insisted that any additional tax revenues should be generated by eliminating tax expenditures (or tax deductions and credits) instead of raising tax rates.

Read more: CBO analysis shows ‘fiscal cliff’ will sharply reduce long-term deficits but lead to a recession in 2013

But keep in mind that tax revenue is only half of the fiscal cliff equation. Lawmakers will also have to address the sequester cuts mandated by the Budget Control Act of 2011. By law, Congress has until the end of the year to find $1 trillion in savings or else the automatic across-the-board cuts to defense and non-defense discretionary programs will take effect.

So unless Congress takes action on both taxes and spending cuts before Jan. 1st, the country will go over the fiscal cliff or a combination of tax increases and steep spending cuts, which economists have warned will push the country back into a recession next year.

Read more: CBO report shows extending Bush tax cuts will raise deficit

A recent Washington Post-Pew poll found that 53% of Americans will blame Republicans in Congress if the country does go over the fiscal cliff. 61% of those surveyed said that going over the fiscal cliff would negatively impact their personal financial situation.

 

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4 Comments on “Corker concedes GOP should let top tax rate go up

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