Rep. Steny Hoyer says middle-class tax breaks may not be affordable long-term

June 22, 2010

Tax cuts that benefit the middle class should not be “totally sacrosanct” as policymakers try to plug the nation’s yawning budget gap, House Majority Leader Steny Hoyer (D-Md.) said Monday, acknowledging that it would be difficult to reduce long-term deficits without breaking President Obama’s pledge to protect families earning less than $250,000 a year.

Hoyer, the second-ranking House Democrat, said in an interview that he expects Congress to extend middle-class tax cuts enacted during the Bush administration that are set to expire at the end of this year. But he said the extension should not be permanent. Hoyer said he plans to call for a “serious discussion” about the affordability of the tax breaks.

“We’re lying to ourselves and our children if we say we can maintain our current levels of entitlement spending, defense spending and taxation without bankrupting our country,” Hoyer says in remarks released in advance of a Tuesday speech sponsored by Third Way, a Democratic think tank.

Hoyer’s comments come as Republicans are battering Democrats over the soaring budget deficit in advance of the fall midterm elections, accusing Obama and his colleagues in Congress of sinking the nation in red ink with spending to combat the recession.

Democrats argue that Republican tax cuts and the GOP’s failure to pay for a new Medicare prescription drug program are contributing more to record deficits than the economic stimulus and other emergency measures.

Still, Hoyer plans to acknowledge in the speech that it will be difficult to build support for the additional stimulus that Obama is seeking without “credible and detailed plans to tackle the deficit.” To that end, Hoyer said, House leaders are preparing a one-year budget resolution that would cut 2011 spending even deeper than Obama and Senate Democrats have proposed and would reaffirm a pledge by House leaders to vote on any deficit-reduction plan that wins approval from a bipartisan commission Obama appointed this year.

Hoyer also indicated he plans to support an effort by Defense Secretary Robert M. Gates to eliminate wasteful spending at the Pentagon. “Any conversation about the deficit that leaves out defense spending is seriously flawed before it begins,” he says in the speech.

The overarching point in Hoyer’s remarks is the need for a bipartisan plan that includes spending cuts and tax increases, in the tradition of deficit-reduction deals cut under former presidents George H.W. Bush and Bill Clinton. Drafting such a plan would require a reexamination of tax cuts enacted in 2001 and 2003, Hoyer says — cuts that benefited most taxpayers.

Republicans want to extend all the tax cuts, at a cost of about $3 trillion over the next decade, whereas Obama has proposed extending only cuts that benefit families earning less than $250,000 and individuals earning less than $200,000. Even middle-class tax cuts would add at least $1.4 trillion to the deficit by 2020, according to the nonpartisan Joint Committee on Taxation.

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