President Obama and his team are willing to offer some “flexibility” on their long-held position that upper-income tax rates must be allowed to revert back to Clinton-era levels at year’s end, said Erskine Bowles, the co-chairman of a national bipartisan fiscal commission who met with Obama on Tuesday.
“I heard it not only from the team, but from the president,” said Bowles, who said he met with Obama and White House Chief of Staff Jack Lew in the Oval Office for 30 to 45 minutes on Tuesday.
But while the administration may be willing to give ground on the details of how to raise revenues to reduce the deficit, the White House still “believes at its core that the revenues ought to come from the wealthy,” Bowles said at a Christian Science Monitor breakfast. “It all doesn’t have to come in the form of higher rates,” he noted, adding that the White House was open to other revenue-raising proposals, such as capping deductions or closing loopholes.
The White House has long insisted that Congress extend Bush-era tax cuts for nearly all Americans, allowing them to expire only on housholds earning more than $250,000. The revenue raised by letting those cuts expire, along with to-be-agreed-upon spending cuts, would be used to reduce the nation's ballooning budget deficits.
Bowles, joined by fiscal commission co-leader former Wyoming Sen. Alan Simpson, also repeated his belief that there is only a one-third chance that congressional leadership and the White House will reach a deal to prevent $500 billion in tax hikes and spending cuts set to go into effect at the end of the year. Should the nation go over the so-called “fiscal cliff”--the common shorthand for the tax hikes and spending cuts--the result would be “horrible” and “devastating,” he said.
But, even if leaders fail to reach a deal, they can act to allay market concerns, Simpson said.
“They don’t have to come out here with a piece of legislation right now--that would be great. All they need to do is come out with a sheet of paper signed by an equal number of Democrats and Republicans from each house, or pretty close... something that shows that both parties are deeply involved in a plan,” he said. “If you did that, the market will get off your case.”
Bowles and a group of executives from corporations such as Goldman Sachs, Caterpillar, Allstate, Aetna and Honeywell International are scheduled to meet with House Speaker John Boehner, R-Ohio, later today.
Bowles and Simpson led a national commission on fiscal responsibility two years ago and produced a report in December 2010 that proposed reducing the budget deficit by $4 trillion over 10 years. They have had difficulty getting lawmakers on board with the full proposal, but the two have toured the nation, sometimes with business leaders, advocating action. The duo also founded the Campaign to Fix the Debt, which counts several business leaders among its members.