Debt panel can start on major tax changes, Boehner says

WASHINGTON (AP) - House Speaker John Boehner urged Congress' deficit "supercommittee" on Thursday to lay the groundwork for a broad overhaul of the U.S. tax code, rejecting Democrats' talk of tax increases but leaving open the possibility the government's take could rise as a result.

Tax increases "are not a viable option" for the committee, Boehner declared in a speech to the Washington Economic Club, ruling out many of the proposals that President Barack Obama is expected to forward to the 12-member panel next week, including some that are part of his major jobs proposal.

Boehner made his remarks as White House officials disclosed that Obama intends to travel to Cincinnati next week as he campaigns for public support of his $447 billion proposal to cut into the nation's 9.1 percent unemployment rate. The political symbolism of the site was unmistakable - an overcrowded bridge that links Boehner's Ohio with Senate GOP leader Mitch McConnell's Kentucky, a span the president has cited as an example of the repair work his jobs program would make possible.

Separately, White House spokesman Jay Carney said Obama will not recommend any budget savings from Social Security when he releases his recommendations to the deficit-cutting committee next week, despite the president signaling support for that idea in summertime debt-reduction talks with Boehner.

Carney declined to say what, if any, recommendations the president might make to find savings from Medicare.

The day's events underscored the extent to which the committee of 12 lawmakers is likely to be guided by the views of the most senior leaders in both political parties as it tries to develop legislation to reduce deficits by $1.2 trillion or more over a decade.

The panel has almost unlimited authority to recommend changes in federal spending and taxes and is working against a deadline of Nov. 23. It held a closed-door meeting during the day, but officials declined to provide details of what was discussed.

In his speech, Boehner was alternately critical of Obama's economic policies and somewhat conciliatory.

"Businesses are not going to hire someone for a $4,000 tax credit if government mandates impose long-term costs on them that significantly exceed the temporary credit," he said, describing a portion of what the president asked Congress to approve in his jobs program.

"Let's be honest with ourselves," he said. "The president's proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America."

The centerpiece of Obama's jobs program is a one-year extension of Social Security payroll tax cuts for workers, expanded to include businesses. He is also seeking other tax breaks, as well as an extension of unemployment benefits, aid to states to permit them to hire teachers and first responders, and construction funding for highways and bridges like the one he intends to visit in Ohio next week.

Asked whether the congressional debt panel might include some of Obama's jobs recommendations in its own work, Boehner said, "I think it's too early to determine whether some of it ends up being the work of the ... committee or whether we do it separately."

Any broad compromise that clears the bipartisan committee is almost certain to require Democratic agreement to savings from benefit programs such as Social Security and Medicare, along with Republican acquiescence to additional revenues, although any such tradeoffs are rarely discussed openly until the last possible moment in negotiations.

The committee's charter is to cut deficits, and Boehner said, "That has everything to do with jobs."

Ruling out tax increases, he said the panel has "only one option, spending cuts and entitlement reforms," a reference to government benefit programs such as Social Security, Medicare and Medicaid.

At the same time, he said the committee 'can tackle tax reform and it should." Boehner said it was probably unrealistic to expect the panel to rewrite the tax code by Nov. 23. "But it can certainty lay the groundwork by then for tax reform in the future that will enhance the environment for economic growth."

He said the elements of an eventual overhaul of the tax code would be lower rates for individuals and corporations while closing deductions, credits, and special carve-outs.

"Yes, tax reform should include closing loopholes. Not for the purposes of bringing more money to the government. But because it's the right thing," he said.

Boehner did not rule out that tax changes might result in additional government revenue, and officials in both parties say that in his talks with Obama last summer the two men were discussing the possibility that an overhaul could mean as much as an additional $800 billion for the Treasury over a decade.

At the White House, Carney said, "I would simply note that the speaker of the House made clear that in the negotiations he had with the president, he put, in his words, revenues on the table. Well, we believe revenues have to be on the table if we're going to solve our deficit and debt problems."

Similarly, in the same talks, Obama appeared willing to include a provision to slow the growth in cost-of-living increases in Social Security and to raise the age of eligibility for Medicare from 65 to 67.

Both provisions sparked strong opposition from liberal lawmakers in the president's own party, and it was not clear whether Obama has decided to rule them out of any future talks or was merely was shelving them for the time being.

The collapse last July of the talks between Obama and Boehner led to legislation that cut spending by nearly $1 trillion over a decade, averted a first-ever government default and created the debt committee that is just now beginning its work in earnest.