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Senate Majority Leader, Harry Reid (D-Nevada), earlier this month reiterated that any new budget deal, aimed at averting series of draconian spending cuts or sequester—which is scheduled to come into effect from March 1— would have to include additional revenue through taxes.
Sequester was originally scheduled to come in to effect at the beginning of the New Year but was postponed until March 1 thanks to a last-minute ‘fiscal cliff’ deal among congressional leaders.
At that moment, the U.S. congress passed a bipartisan bill approving raising taxes on wealthy individuals, postponing other unresolved issues (federal government’s spending cuts) by about three months.
In an interview to ABC’s ‘This Week’, Reid said, “The American people are on our side. The American people don’t believe in these austere things. We believe that the rich should contribute. We believe we should fill those tax loopholes, get rid of them, I should say. And that’s where we need to go.”
It is estimated by Macroeconomic Advisers, a forecasting firm in St Louis that sequester will knock down 0.7 percentage points from the economic growth, slowing down the annual GDP growth rate to 1.9 percent in 2013.
However, political brinkmanship in Washington is keeping Americans, investors and business leaders on toes.
While the GOP insists that it has already offered enough concessions to Democrats by agreeing on raising additional revenue through taxes, Democrats maintain that any new deal should focus on spending cuts and generating extra revenue through taxes.
Back in January, Republican and House Budget Committee Chairman, Paul Ryan, warned that “sequester is going to happen”, adding that the White House was not compromising on the issue of raising revenue through spending cuts.
However, Reid added that doors were not completely shut and there was still a scope for reconciliation. Reid also supported 2012 GOP presidential nominee Mitt Romney for his suggestions on sealing tax loopholes and abolishing deductions in order to augment revenue.
Meanwhile, earlier this month President Obama failed to present the budget blueprint for fiscal 2014 for third straight year. According to Bloomberg, a defense official familiar with the matter said that President Obama is very unlikely to send his fiscal 2014 budget blueprint to the U.S. Congress anytime sooner than March. This official requested for anonymity as it was not officially disclosed by the Whitehouse when the budget will be ready, according to Bloomberg.
The postponement of the spending budget, which according to the U.S. law was supposed to be delivered on Monday, sparked severe criticism from the GOP and House Speaker, John Boehner.
Reacting over the delay, an infuriated Boehner (R: Ohio) said in a statement, “For the fourth time in five years this White House has proven it does not take trillion-dollar deficits seriously enough to submit a budget on time,”
“It’s long past time for the president to do his job,” added Boehner.
The House’s Press Secretary, Jay Carney, declined to comment on the date. While addressing press reporters, Carney earlier this month said “I don’t have an update on the president’s budget,” adding that he was travelling with the President to Minnesota to attend an event.
Nonetheless, the decision to delay annual budget blueprint has not come as a surprise since the Obama administration had hinted earlier at missing the deadline due to policy stalemate over unresolved spending cuts, taxes and debt ceiling issues.
Meanwhile, President Obama reiterated his demand for raising additional revenue through taxes. While speaking to CBS, Obama said that he was in favor of generating additional revenue by reducing tax breaks for affluent Americans and the treatment of profits in buyout deals, referred to as carried interest
