Republicans say raising tax rates alone will hardly put dent in budget, deficit

FILE: Sept. 9, 2009: Rep. Tom Price, R-Ga., holds up the Republican version of the health care bill on Capitol Hill in Washington. (REUTERS)

Republican congressional leaders, in their battle to extend the current low tax rates for all Americans, drive home Tuesday their argument that ending those rates for families earning more than $250,000 a year would produce only enough money to run the government for less than nine days.

The lawmakers pointed out that President Obama's tax rate plan would generate just $82.3 billion annually, as estimated by the non-partisan Congressional Budget Office. Republicans argue he should be focused on a more balanced approach that includes cuts to federal spending -- including to entitlement programs, such as Medicare, Medicaid and Social Security.

“The president's plan to increase taxes on the upper 2 percent (of American earners) covers the spending by this federal government not for eight years, not for eight months, not for eight weeks but for eight days,” Rep. Tom Price, R-Ga., said Tuesday on MSNBC.

It was a phrase he has repeated often since the elections three weeks ago and since talks resumed between Congress and the White House on a deal on taxes, spending and the deficit before the Bush-era tax rates expire and massive spending cuts automatically kick in Jan. 1.

The tax increases and spending cuts will equal about $500 billion in 2013. And roughly $1.2 trillion will be cut from the federal budget over the next 10 years should both sides fail to reach a deal.

Some economists say those scenarios could send the country over a “fiscal cliff," with a new recession likely.

Republicans have said they would consider increased revenue through tax reforms, such as closing loopholes, but they are opposed to tax rate changes on top incomes, which they say would barely put a dent in the budget.

“Eight days only,” Price continued Tuesday. “It's not a real solution. I’m puzzled by an administration that seems to be more interested in raising tack rates than in gaining economic vitality.”

The theory that the cuts would run the federal government for less than nine days is based on the daily operating cost being $9.69 billion – which would mean the $82.3 billion in cuts would cover only that period.

The president has a goal of cutting $4.4 trillion from the budget over the next 10 years.

Republicans over the past few days have agreed that additional revenue is needed to check the deficit, which has consistently topped $1 trillion in recent years. But they also criticize Democrats for not saying which specific cuts they will agree to.

“Republicans understand that we must avert the fiscal cliff and have laid out a framework to do so that is consistent with the ‘balanced’ approach the president says he wants,” Mike Steel, spokesman for House Speaker John Boehner, said Tuesday. “In contrast, Democrats in Congress have downplayed the danger of going over the cliff and continue to rule out sensible spending cuts that must be part of any significant agreement to reduce the deficit.”