Jan. 5 (Bloomberg) -- House Ways and Means Committee Chairman Dave Camp said he is confident that Congress and the White House will avert a default on U.S. government debt even as Republicans will demand “significant” spending cuts to raise the legal borrowing limit.
Camp, a Michigan Republican whose panel holds jurisdiction over tax legislation, also said he is reassessing a top 25 percent rate he has proposed as part of a plan to revamp the U.S. income-tax code. He added he is “absolute” in opposing any further tax increases.
The agreement Congress passed this week to avoid automatic tax increases and spending cuts creates a new starting point for his efforts to adopt a simpler tax code, Camp said. The tax system should have lower rates financed through fewer deductions and credits, he said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.
The new law, signed on Jan. 2 by President Barack Obama, raises income-tax rates on couples to 39.6 percent for annual income above $450,000. Camp last year had set a goal of establishing a maximum 25 percent income tax rate through an overhaul.
Camp said he wants his tax plan to be “revenue-neutral.” So the new law raising more money from top earners sets a higher revenue target than he had under his previously announced plan.
“I have to re-evaluate it with the new baseline,” Camp said, adding, “I’m going to try to get that rate as low as I can.”
To lower tax rates, Congress will have to look at curtailing breaks including deductions for home-mortgage interest and state and local taxes, Camp said.
Camp, 59, echoed statements from Senate Republican Leader Mitch McConnell in opposing Obama’s calls for a “balanced” approach in further deficit reduction that includes more tax increases. Camp said future deficit deals would have to come from spending cuts only.
This week’s agreement on the so-called fiscal cliff “established how much on a permanent basis what the government’s going to get out of the economy, and we’re not going to go for any more,” Camp said. That “is an absolute in my book,” he added.
When asked about Republican House Speaker John Boehner’s call for a dollar-for-dollar match in spending cuts in exchange an increase in the legal debt limit, Camp demurred.
“I don’t think that’s necessarily been established,” he said. He said he will seek “significant reforms in spending.”
Camp said his party will demand “reforms in entitlements” that “address the unsustainability” of Medicare health insurance for the elderly and disabled, Medicaid health coverage for the poor and Social Security retirement benefits.
He cited a change in the Social Security cost-of-living adjustments that would lower annual increases in payments as a likely area of agreement between congressional Republicans and Obama.
Camp called on the president to “lead his party” by publicly advocating deeper reductions in spending on those programs.
He offered assurances that even with the disagreements between congressional Republicans and the White House, lawmakers would raise the $16.4 trillion debt limit in time to avoid missing payments on U.S. obligations.
“Absolutely, we’re going to not default,” Camp said. “That’s just not even part of the issue.”
The U.S. reached its legal debt limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.
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