GOP Want More In Exchange For Tax Package: House Republicans Rethink Increase In Taxes

Tax Rebate

House Republicans have said that the tax package they backed by raising the debt ceiling is the only concession they will make. While the tax package avoided a debt ceiling and saved the day for the ruling democrats, House Speaker Kevin McCarthy signaled his unwillingness to compromise with Democrats over a slew of GOP demands. 

McCarthy has raised a number of demands they way in exchange for backing the tax package and raising the debt limit. While some are relatively easy to solve in a bipartisan setting, other issues could prove intractable. 

Some House Republicans have also put forth a long list of demands that resembles a conservative wish list. But they are not part of the House Speaker’s list and will be a definite red flag for the ruling Democrats. 

Tax Package

The tax package deal to lift the debt ceiling had a harder tone in the final weeks of negotiations. The congressional Republicans and the White House tried to arrive at a compromise amid vast differences. But other Republicans view the tax package as a concession to the ruling Democrats as it avoided a potentially catastrophic US debt default.  

And it is the only concession that the GOP is willing to make for the Democrats. A default by the largest economy in the world could wreak the world economy and that is something the Republicans realized all too well. So while increasing the borrowing limit can be considered merely a formality, the Republicans have made a big show of agreeing to the proposal by President Biden. The increase in the tax package is more of a formality and is structured as a joint bill that often is tagged onto unlinked legislation. 

The Republicans were asked about the concessions that they were making to enable the tax package to move forward. This compromise over the tax package is being seen as potentially the only one the Republicans are going to make. 

The Republicans hold a thin majority in the House, and the Senate in the hands of the ruling Democrats. Both sides need to come up with a tax package that will be acceptable to a broad spectrum of legislators in both parties.

Republicans Have A List Of Demands In Exchange For Agreeing On The Tax Package

The Republicans have rejected two compromise offers from the Democrats. While the first was about a freeze in government spending in 2024 at present levels, the second would have placed a two-year cap on spending. 

Even as demands keep changing from the GOP in exchange for backing the tax package, here is a broad spectrum of demands that the Republicans have made. Some could be accepted by the Democrats, but many are seen as intractable and are a point of contention. 

One of the easiest issues that could see the light of day is the launch of new energy projects including gas pipelines and wind farms across the United States. But there are differences in what kinds of permits are to be prioritized. While the Republicans are all for fossil fuels, Democrats are for giving priority to renewable energy at the cost of fossil fuels. 

The Republicans have also demanded that the White House plows back around $30 billion of the approximately $4.6 trillion that Congress authorized between 2020 and 2022 in the fight against the pandemic. This amount could be used for other purposes. The White House has indicated that President Biden could agree to this demand. 

The Republicans passed the debt limit bill in April this year requiring fit adults with no children to either work or at least train for work as a condition to continue receiving Medicaid, the health insurance guaranteed by the federal government for low and moderate-income Americans.  The White House has rejected the proposal. President Biden said in May that he would not allow to include any work requirements that could impact the medical health needs of people. 

While the Medicaid issue is a point of no compromise, there could be someplace for compromise on the Republican proposal to increase the work retirement age window for those included in the Supplemental Nutrition Assistance Program. The GOP has proposed increasing the age requirement for SNAP from 50 to 55. 

While rejecting the work requirement demands of Medicaid, President Biden noted that while he would not accept work requirements that could impact the medical needs of people. But he also said that he was willing to accept work requirements in a few other areas but not anything of consequence. 

The biggest point of difference, and over which talks had earlier collapsed, was a federal budget baseline number for 2024 that is lower than that of the 2023 figures. Speaker McCarthy has often said that the US national debt of $31.4 trillion was the same as individual consumer debt. And if the figure is crossed in a year, a person was obliged to spend less in the following year. 

Tax Package

Republicans are continually using their leverage in the House and the pressure of an impending default on the debt ceiling to force the Democrats to toe their line. President Biden has stood firm til now. 

But while McCarthy has insisted on the cuts, he has sought to insulate the defense budget from any form of cuts. The defense budget alone makes up 30% of the total expenses. In such a situation, the other expenses would have to take a deep cut to match the overall number to 2022 levels.

Experts believe that exempting the military from a rollback in spending would require a larger cut in other government expenditures. This includes everything from public health to homeland security, to air traffic control. And the cut could be in the region of 20%.

Biden has countered the Republican demand with a proposal that would freeze next year’s spending demands to next year’s levels. But it has been rejected by McCarthy and the Republicans, putting pressure on the passage of the tax package. 

The Republicans also came up with a second set of demands but which McCarthy has not pushed at the table. These include repealing the electric vehicle tax credits, additional funding for the IRS, and overturning around $315 billion worth of student debt forgiveness. 

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