Federal deficit impasse hinges on parties' tax ideology

It's no surprise Democrats and Republicans in Congress are having a hard time reaching a deal to extend the national debt limit when they can't even agree on the definition of tax increases.

Rep. Cedric Richmond, D-New Orleans, argues "closing loopholes that allow some people not to pay their fare share of taxes is not what I look at as a tax increase."

But Louisiana's seven Republican congressional members are holding to a pledge they signed from the conservative Americans for Tax Reform that defines tax increases much more broadly.

The pledge commits the signers "to oppose increases in the marginal income tax rate for individuals and business and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

That would mean savings from eliminating tax breaks could not go for deficit reduction.

President Barack Obama wants to eliminate some tax breaks for oil and gas companies, hedge fund managers, and those who purchase or lease corporate aircraft, producing one dollar in extra tax revenue for every two dollars in budget cuts as part of deal to extend the debt limit. Without an extension by Aug. 2, Obama's Treasury Department and many private economists predict a sudden rise in interest rates that could trigger an international economic crisis.

Republicans continue to say there won't be deal if the president and Democrats insist on tax increases that they argue would harm an already struggling economy. Democrats argue that only cutting programs that primarily benefit the middle class and poor, without touching the special tax breaks reserved for America's wealthiest businesses and individuals, isn't true to the American tradition of shared sacrifice.

Variety of tax stances

Rep. Jeff Landry, R-New Iberia, who got extensive news coverage when he declined a presidential invitation to join the GOP House caucus for a deficit reduction discussion, said his constituents don't want any tax increases.

"I don't think there's any appetite for that right now because people don't think we've gotten government spending under control," Landry said.

Sen. David Vitter, R-La., and Rep. Charles Boustany, R-Lafayette, support elimination of special tax breaks, but only as part of a deal to lower overall tax rates. Rep. Steve Scalise thinks "any change in tax policy should result in lower overall taxes," spokesman Stephen Bell said.

Those positions, though dominant among congressional Republicans, aren't universal.

Sen. Lindsey Graham, R-S.C., and several other GOP senators are pressing their colleagues to end the tax subsidy for ethanol, the corn-based additive to gasoline. Vitter and 32 Republicans went along, but not as part of a deficit reduction package.

Graham has said savings ought to go toward reducing the deficit. Do away "with the ethanol subsidy and a bunch of other subsidies that go to a few people, take that money back into the federal treasury and pay off the debt," Graham suggests.