House Democrats are up in arms that the White House isn’t pushing harder for tax hikes for the wealthy as part of the debt ceiling talks, fuming that the deficit-reduction debate has centered on Republicans’ insistence on sharp spending cuts.
While President Biden has repeatedly called for tax hikes on wealthy Americans to accompany the talks, he’s stopped short of demanding such provisions as part of a final deal. And there’s been no sign the White House officials on the front lines of the negotiations are threatening GOP leaders with red lines on the issue.
Speaker Kevin McCarthy (R-Calif.), meanwhile, has rejected new revenues out of hand, saying they’re a non-starter in the conservative-leaning House GOP conference that controls the lower chamber.
The combination, according to the Democratic critics, makes for a lopsided negotiation — one where both sides want to raise the debt ceiling, but Democrats are asked to swallow unpopular cuts to get it while Republicans don’t have to give up anything at all.
“That’s what sucks,” Rep. Bill Foster (D-Ill.) said. “We should have a 1-to-1 ratio between revenue and cuts.”
The dynamics mark a sharp departure from debt ceiling fights in the past, when both sides of the budget ledger were represented at the table. In those battles, Republicans would demand cuts to federal programs, Democrats would insist on revenue hikes, and both parties acknowledged a deal was impossible without ceding something to the other side.
Some Democrats are blaming Biden — who initially refused to negotiate with Republicans on the debt ceiling — for waiting too long to launch the talks, thereby undermining the Democrats’ leverage to demand revenues.
“I think that ship sailed, and it’s disappointing to me that that wasn’t injected from the very beginnings of this negotiation,” said Rep. Dean Phillips (D-Minn.), a member of the centrist Problem Solvers Caucus.
“I do not want to undermine the current negotiation,” he added, “but I’m deeply disappointed that wasn’t immediately met with demands for revenue increases — at least loophole closures, for goodness’ sakes. That was a big mistake.
“You’re negotiating against yourself if you’re not asking for something.”
The White House has rejected the idea that the administration is not fighting for revenue raisers, saying it’s made clear publicly and behind closed doors that it wants tax hikes to be a part of the final package — and it wants Biden’s Democratic allies to help apply the pressure on Republicans to accept those terms.
As the debate has evolved, Biden has claimed a series of victories on the revenue side, saying he’s rejected GOP demands for billions of dollars in tax breaks for major oil companies, billions more in “excess payments” to big pharmaceutical companies, and will continue to fight to raise the actual tax rates on billionaires and major corporations.
“They just said revenue is off the table. Well, revenue is not off the table,” Biden said Sunday during a press briefing in Japan. “We are willing to cut spending, as well as raise revenue, so people start paying their fair share.”
But those claims are being met with some skepticism among House Democrats, who have been cut out of the direct negotiations and are waiting anxiously to learn what Biden’s team has agreed to.
“It is almost impossible to reconcile what we’re hearing about Biden pushing back with all of the other stuff we’re hearing that suggests the opposite. So I think there’s a great level of discomfort,” Rep. Jared Huffman (D-Calif.) said.
“He’s not only not pushing back hard enough, he has dignified this notion that McCarthy is an honest broker and a reasonable leader,” Huffman continued. “If you look a little deeper, these are extreme, reckless demands linked to a default, and we have not projected that narrative at all — in large part because the White House just hasn’t done it.”
The criticisms arrive as Biden and McCarthy are racing for a deal to lift the debt ceiling and prevent an unprecedented government default, which the Treasury Department has warned could occur as soon as June 1.
The debate is reminiscent of 2011, when former President Obama squared off against then-Speaker John Boehner (R-Ohio) in a battle that threatened a default and sparked the first credit downgrade in U.S. history. But there are significant differences between then and now.
Republicans are still demanding sharp spending cuts below current levels, but unlike Boehner, they have refused to accept tax hikes in return. McCarthy has defended that position, arguing that federal revenues, as a percentage of the economy, are higher than they’ve been in years.
“So it’s not a taxing issue. What it really is is a spending issue,” the Speaker said recently on Fox Business. “And the White House needs to understand this.”
Biden and his Democratic allies have rejected that argument, noting that tax rates — particularly for wealthy individuals and corporations — are lower than they’ve been in decades, and maintaining those low rates should not come at the expense of federal programs for low-income people.
“We need to cut spending, but … here’s the disagreement,” Biden said Monday evening, just before meeting with McCarthy at the White House. “We should be looking at tax loopholes and making sure the wealthy pay their fair share. I think revenue matters as well — as long as you’re not taxing anybody under 400,000 bucks.”
Not all Democrats are blaming the White House for the absence of revenues in the current debate. Some lawmakers accused McCarthy of simply refusing to negotiate on the issue — at the threat of a debt default.
“This is not negotiation; this is extortion and it’s hostage-taking. Because they are not open to any sort of counter in the form of revenue raises,” said Rep. Alexandria Ocasio-Cortez (D-N.Y.). “[Biden] has demanded it; he has introduced that. And they are walking away.”
Still, others say McCarthy’s strategy is working at least in part because the White House has failed to make that case to the public.
“It is extreme and the White House is not helping us explain that to the American people,” Huffman said. “Which is really putting us in a poor negotiating posture.”