Republicans Consider Tying Ambitious Tax Overhaul to Debt Limit Talks

Posted April 29, 2013 at 4:03pm

House Republicans are discussing plans to bring an overhaul of the tax code into an upcoming fight with President Barack Obama over raising the debt ceiling, but they do not see a tax rewrite as a substitute for the big spending cuts they also hope to achieve.

Michigan Republican Rep. Dave Camp, likely serving his last term as chairman of the powerful Ways and Means Committee, has expressed reservations in the past about linking a tax overhaul to a large budget agreement. He believes his committee is more likely to produce solid legislation if it is given the time and space to craft a bill on its own terms rather than a measure to be used as a bargaining chip.

But in searching for a strategy to secure passage of a tax overhaul bill, Camp and GOP leaders appear increasingly interested in discussing a simplified tax code, with fewer tax breaks and lower tax rates, in the context of the debt ceiling.

“Discussions are just beginning, but there is a lot of excitement around tax reform within the conference,” a senior House GOP aide said.

It is highly unlikely a tax overhaul alone would secure House passage of a debt ceiling increase, several GOP aides said. Rather, language that puts tax legislation on a fast track in the House and Senate is something that might help propel a deal forward, perhaps by making up for some perceived shortfalls in the amount of spending cuts.

Contrary to what Democrats want, Republicans are only interested in a “revenue-neutral” overhaul that would not be scored as a tax increase by the Joint Committee on Taxation.

Besides a pending “prioritization” bill that would require the Treasury Department to pay some bills to stave of a default, the House GOP’s strategy on the upcoming debt ceiling is still largely up in the air. Republicans are planning to hold a special, extended closed-door conference meeting in May to hash out the matter, much like their January retreat in Williamsburg, Va.

Many House conservatives remain committed to demanding rewrites of entitlement programs in conjunction with raising the debt ceiling.

“To us, the debt ceiling’s always represented a symptom of the spending problem. And so, as we approach the debt ceiling, in order to increase it, a lot of us feel you ought to also be working on fixing the structural problems that keep causing us to hit the debt ceiling,” Louisiana Rep. Steve Scalise, the chairman of the Republican Study Committee, said in mid-March after he and several other top conservatives met with House leaders on the issue.

The RSC is surveying its members this week to get a precise read on what they would like to demand for a debt ceiling increase.

A copy of the survey obtained by CQ Roll Call asks members to choose between whether they would vote to increase the debt ceiling “if it is tied to entitlement and/or tax reforms that lead to a balanced budget within 10 years, if it is tied to repeal or delay of Obamacare, if certain other legislation is enacted,” or whether they will “always” or “never” vote to raise the debt ceiling.