Republicans Make Counter Offer, Tax Extenders Precarious

The atmosphere in Washington DC can change in a heartbeat.
On the way into my office this afternoon, I listened to a lively talk-radio discussion of today’s Republican counteroffer to the president’s tax and spending proposals.  Upon arriving, I found an e-mail summary of the situation sent by Paul Suplizio, President of the WOTC Coalition.
The Republican counteroffer does not mention the Work Opportunity Tax Credit (WOTC) program or tax extenders although it does contain language dismissive of President Obama’s request for additional stimulus spending. The situation appears precarious and requires immediate action by coalition members and others interested in the tax extenders becoming part of any tax-spending compromise bill.
Mr. Suplizio’s correspondence to WOTC Coalition members is published here with permission (emphasis shown is from the original).
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From: Paul Suplizio
Sent: Monday, December 3, 2012 4:54 PM
Subject: Republicans Make Formal Counter-Offer, Tax Extenders Not Mentioned
December 3, 2012
Congressional Republicans made a formal written counter-offer today to the President’s proposals on the fiscal cliff presented to them by Treasury Secretary Tim Geithner.
Republicans are offering new tax revenue of $800 billion while making spending cuts of $1.2 trillion–$900 billion from entitlement programs like Medicare, Medicaid, welfare, food stamps, and federal pensions, and $300 billion from discretionary spending, that is, accounts of government departments. Republicans would cut $600 billion from Medicare and Medicaid.
The President, on the other hand, is asking for $1.2 trillion in new revenue and $600 billion in spending cuts, of which $400 billion is from Medicare and Medicaid. The President also wants to apply war savings of $800 billion to deficit reduction, while continuing the tax extenders, payroll tax relief, AMT, doc fix, and extended unemployment compensation.
The Republican letter to the President noted their counter-offer was based on a proposal by the co-chair of the President’s Commission on Deficit Reduction, Erskine Bowles, submitted last year as a possible compromise.
However, the new revenue offered by Republicans follows the Ryan budget passed by the House, in that revenues would be increased by closing tax loopholes and deductions via tax reform.
The letter, signed by the top seven Republican House leaders, states that they cannot in good conscience agree to raising tax rates. In effect, this would require extending the Bush tax cuts in their entirety as part of a deal—directly opposed to the President’s insistence on raising tax rates on higher incomes.
The Republicans say, “Notably, the new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small business and our economy. Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates.”
Republicans brush aside that part of the President’s offer calling for enactment of the tax extenders, AMT, doc fix, payroll tax relief, and unemployment compensation because, they say, any spending cuts would thus be “cancelled out by the additional ‘stimulus’ measures the Administration is requesting.”
Republicans close by saying they are “ready and eager to begin discussions” and ask the President to respond to their letter “in a timely fashion.”
In sum, Republicans propose to extend the Bush tax cuts in their entirety now, with $800 billion in additional revenue coming later, through tax reform. Importantly, the spending cuts in their offer would be enough to offset the $40 billion cost of extending expired or expiring tax provisions for two years, or even longer—in the talks, we are taking the position offsets don’t have to come from taxes alone.
Both Republican and the President’s proposals imply there’s a need to pass a tax bill before December 31st. Should they fail to agree on the content of that bill, the Bush tax cuts expire. In that event, there will be a strong temptation to boot the entire question to the next Congress by doing nothing. Yet doing nothing when the people are united in demanding action may grow unbearable and make for compromise.
That’s what we’re counting on. The people must be heard—and that starts with your Coalition!
Negotiations are just beginning and we’ve seen this game before, running the clock till one side blinks and a last-minute deal comes together—or it doesn’t! We cannot be discouraged by the sides being so far apart in their opening salvoes. Rather, we have to re-double our efforts and make sure the following message gets through to every Republican congressman in the House:
“We are glad to see the President and Republican leaders have now made formal offers to avoid the fiscal cliff and are ready and willing to negotiate. It’s imperative all tax rates be settled before year end so the American people and businesses can go into 2013 with clear and certain tax rules. To this end, it’s vital for Congress to re-authorize expired tax provisions like the Work Opportunity Tax Credit, which helps private sector employers hire over a million people with disabilities, veterans, youth, seniors, and welfare recipients each year. Please bring this urgent matter to the attention of your leaders and work to ensure expired tax provisions are re-authorized before Congress adjourns.”
You should do this immediately. A phone call to your Republican congressman, together with a faxed letter on your letterhead, will get the message through. For businesses and organizations, now is a good time to re-assert your position in writing on your letterhead, signed by your CEO. The fact the Republican offer doesn’t mention WOTC or the extenders is reason enough for action and urgency. We don’t recommend e-mail. To get a congressman’s fax number, call 202-224-3121 and ask for it.
Don’t wait! Tomorrow the situation may change, and the tenor of our message may change. The Republican offer presents an opportunity for us to point out it doesn’t mention extenders, and this means Republican leaders need to be pressed on this point!
Many thanks for your cooperation. Should you have any questions, feel free to contact me at 703-587-4566.
PAUL E. SUPLIZIO
President, WOTC Coalition