Boehner Signals Revenue to Be Weighed in Congressional Debt Plan

Republicans are willing to consider raising revenue as part of a debt-cutting plan under discussion by a congressional panel if Democrats agree to “real reform” of entitlements such as Medicare and Medicaid, said House Speaker John Boehner.

“There’s room for revenue but there clearly is a limit to the revenues that may be available” to help reach the congressionally mandated target of cutting government deficits by at least $1.2 trillion, Boehner, an Ohio Republican, told reporters yesterday in Washington.

Republicans have refused to accept tax increases that Democrats insist must be enacted in exchange for cuts in entitlement programs such as Medicare, the health-care program for the elderly and disabled.

The 12-member supercommittee, composed of six Republicans and six Democrats, confronts the same political disagreement that has proven so difficult to resolve all year, he said.

Democrats “want more revenue than what we are willing to give and they are not as willing to do as much entitlement reform as we’d like to do,” he said. “If there is going to be an agreement here, there has to be some kind of formula.”

With daily retirements of 10,000 baby boomers, the generation born after World War II, changes are needed in Social Security, Medicare and Medicaid “if the programs are going to exist tomorrow,” the speaker said.

‘Made This Clear’

“Without real reform on the entitlement side, I don’t know how you put any revenue on the table,” Boehner said. The speaker said he “made this clear” to President Barack Obama during failed negotiations on deficit-reduction bargain in July.

Boehner declined to give specific examples of proposals to curb spending on entitlement programs except to say that a new method of calculating cost-of-living increases that has been discussed “certainly has some merit.”

Asked about changing the eligibility age for Social Security and Medicare, Boehner said, “There are a lot of issues on the table; everybody knows what the menu is.”

On closing tax loopholes in exchange for an overhaul of the tax code, Boehner said, “There’s all kinds of discussions, permutations of models.”

Earlier this week, 40 Republicans signaled support for revenue increases, joining 60 Democrats in signing a letter that urged the supercommittee to aim for cuts of $4 trillion.

Debt-Limit Compromise

Of the 40, 35 voted for the debt-limit compromise in early August. Twenty-nine represent districts carried in 2008 by Republican presidential nominee John McCain, while the other 11 represent districts won by Obama. Six of Pennsylvania’s 12 House Republicans signed the letter, as did five of the eight Republicans representing New York districts.

The director of the White House Office of Management and Budget, Jacob Lew, said yesterday that their willingness to support revenue increases is a “hopeful sign.”

The Republican opposition to tax increases was underscored by a letter released yesterday by Senator Jim DeMint of South Carolina. Signed by him and 32 other Republican senators, the letter urges the supercommittee to propose a comprehensive tax overhaul that lowers rates “with no net tax increase.”

It also calls for a plan that would balance the federal budget within 10 years.

Infrastructure Proposal

Boehner said the House will consider legislation in the coming weeks to finance infrastructure construction, in part, by expanding energy production. The measure would “remove barriers to American energy production” and streamline approval of construction projects, he said.

Boehner said extra revenue would help shore up the highway trust fund, which is financed by an 18.4 cents per gallon excise tax on gasoline.

The measure would create “a new devoted revenue stream” so that as “American-made energy production increases so does the revenue for infrastructure projects,” the speaker said. It would provide a first step toward finding a permanent revenue source for bridge and highway construction money, he said.

Asked whether expanded energy production would include more oil and gas drilling on the outer continental shelf, Boehner said “yeah,” then added, “I am going to let the Natural Resources Committee and others” determine where more production would be allowed.

Boehner said he hoped the House could complete action on the measure by year’s end. It would prohibit set-asides for such projects as baseball parks or parking garages, he said.

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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