Cantor Urges GOP To Resist Tax Hike Pressure After S&P Downgrade
August 8, 2011
House Majority Leader Eric Cantor (R-Va.) told Republican lawmakers to expect, and resist, increased pressure to raise taxes following the downgrade of the U.S. credit rating by Standard and Poor’s.
“Over the next several months, there will be tremendous pressure on Congress to prove that S&P’s analysis of the inability of the political parties to bridge our differences is wrong,” Cantor wrote in a memo Monday to House Republicans. “In short, there will be pressure to compromise on tax increases. We will be told that there is no other way forward. I respectfully disagree.”
Cantor’s letter is another sign that both political parties are retrenching in the wake of S&P’s decision to strip the U.S. of its AAA rating for the first time in history. Democrats have blamed Republicans and the Tea Party for manufacturing a debt crisis and walking away from the kind of bipartisan “grand bargain” that would have prevented the downgrade. The legislation Congress passed last week to avert a default contained just $900 billion in initial deficit reduction, much less than the $4 trillion President Obama had discussed with Speaker John Boehner (R-Ohio).
Stock markets plunged on Monday, with the Dow Jones Industrial Average dropping 634 points.
In a statement issued shortly after Cantor’s memo, Boehner reiterated the GOP’s opposition to tax increases.
“Providing economic certainty and creating an environment in which businesses can invest and jobs can flourish must remain our number-one focus. That’s why raising taxes is simply the wrong approach,” Boehner said.
Boehner had agreed to about $800 billion in additional revenues as part of a broader deficit reduction and tax reform package he discussed with President Obama, and it remains to be seen whether the joint congressional committee created by the debt deal will consider new revenues in addition to spending cuts.
In his memo, Cantor said that while the S&P’s analysis of the U.S.’s exorbitant public debt cannot be discounted, it was “overly focused” about solutions that could worsen the jobs crisis. “S&P seems particularly focused on what it sees as the inability of the political parties to bridge our differences on the best way to eliminate the deficit. By this it means – in part – our unwillingness to raise taxes,” Cantor wrote.
The majority leader said Congress can find additional savings from entitlement programs “without tax increases,” and he repeated his long-standing criticism of Obama for being unwilling to make major structural changes to Medicare and Medicaid.
“The president remains opposed to any structural reforms, and would only nibble around the edges of these programs IF taxes are increased on job creators,” he wrote. “Given that reality, I firmly believe that these are issues that will be central to the decision that voters will make in the 2012 election.”
Cantor said the House would take “continual and steady action” on bills to reduce regulatory burdens on job creation when Congress returns in September.
“Our country currently faces two very serious crises - debt and jobs,” Cantor wrote. “These two crises are not mutually exclusive, but they are equally dangerous. That is why it is absolutely critical that as policies are developed to overcome each, we consider their impact upon each other. Anything less would be negligent.”