The $85 billion in budget cuts sequestration brings boils down to a debate between Democrats and Republicans about taxes, The Journal News/lohud.com reports today. Democrats and President Barack Obama and Democrats in Congress believe new tax revenue should be part of the solution, but Republicans disagree, Gannett Washington reporter Brian Tumulty writes.
The partisan divide was a factor in the failure of competing proposals to avoid sequestration in the Senate yesterday.
Democrats proposed a package that would have generated $54 billion in new revenue over 10 years by requiring people who earn more than $2 million a year to pay a 30 percent income-tax rate. They want to raise $2 billion by ending a policy that exempts tar sand and oil sand producers from paying into an oil spill liability trust fund. They also proposed ending tax breaks for companies when they spend money to move operations overseas, which would have brought in $1 billion.
The package of bills would have made targeted spending cuts and eliminated direct federal payments to farmers.
Republicans contend that Obama already got a tax hike in legislation that was adopted in January to avoid the “fiscal cliff.” The law implemented higher tax rates for families that earn more than $450,000. It also renewed most of the Bush-era tax cuts and phased out many deductions for households with incomes greater than $250,000.
The GOP proposal would have given the president until March 15 to develop an alternative plan for saving the same amount of money without across-the-board cuts.
The sequestration cuts were part of a 2011 deal to raise the nation’s debt limit. The $85 billion in cuts are the first installment to take place. They would total an estimated $1.2 trillion through the end of the 2021 fiscal year.