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To Counter Obama, House GOP to Woo Small Businesses

To Counter Obama, House GOP to Woo Small Businesses

By Caitlin Huey-Burns - November 28, 2012

With President Obama set to take his fiscal cliff-averting tax proposal on the road later this week, House Republicans are countering with a public relations tour of their own: They’re using small businesses to ratchet up support for -- and hold Democrats’ feet to the fire on -- entitlement spending and tax reforms.

With an end-of-year deadline approaching on tax hikes and mandatory spending cuts, the two sides have chosen not to hunker down in talks with each other, signaling that a budget framework agreement is not close at hand.

Instead, Obama will head to Pennsylvania on Friday to rally Americans around his plan to extend tax cuts for middle-class families while allowing them to expire for the top 2 percent of earners. Meanwhile, congressional Republicans have their own plans to show how those higher tax rates will negatively affect small business owners, whom they say are key job creators.

The president campaigned on his call for the wealthy to pay more in taxes as part of a deficit-reduction strategy, and has taken his re-election as a mandate to follow through. Republican leaders have said they are open to increased revenues through tax reform, including closing loopholes and limiting deductions, but only if coupled with significant cuts to entitlement programs.

With the small-business tour on tap along with other messaging moves, the GOP is trying to paint Democrats as wanting even more from taxpayers instead of controlling spending, pointing to some liberal lawmakers’ suggestion that going over the so-called cliff might be preferable to entitlement cuts.

“Republicans understand that we must avert the fiscal cliff and have laid out a framework to do so that is consistent with the ‘balanced’ approach the president says he wants,” said Michael Steel, spokesman for House Speaker John Boehner. “In contrast, Democrats in Congress have downplayed the danger of going over the cliff and continue to rule out sensible spending cuts that must be part of any significant agreement to reduce the deficit. The target of the president’s rallies should be the congressional Democrats who want to raise tax rates on small businesses rather than cut spending.”

House Majority Whip Kevin McCarthy will host small business leaders at his office next week to discuss solutions to the deadlock. "These businesses employ the majority of Americans and will be the most adversely affected by an increase in tax rates," McCarthy said, citing a letter from small business associations urging congressional leaders to avert tax hikes and to tackle spending programs. “The Democrats' obsession with punitive tax increases isn't a solution."

The battle over how to raise revenue has become a key issue for Republicans in this deal, while Democrats are being challenged in how far they will go in cutting entitlements. During the failed 2011 debt-ceiling negotiations between Obama and Boehner, the president put some entitlement savings on the table, such as cuts to a health program for veterans and raising the Medicare eligibility age. The White House has said Medicare and Medicaid should be part of the larger discussion, but Republicans say the president has offered no clear and significant plan to reform them.

As Congress returned this week after the Thanksgiving holiday (during which White House aides met with congressional leaders), it became clear that any significant movement would likely occur in time-honored Washington fashion -- at the last minute. Though Obama called Boehner and Senate Leader Harry Reid over the weekend, the men do not plan to meet this week. On Tuesday, Boehner’s office announced plans for Republicans to take their case to the public.

“The next couple of weeks are hard, because no one wants to pre-negotiate. Nobody is talking at all about what kinds of savings to find,” observed Danielle Doane, director of government studies at the Heritage Foundation, noting that she and her fellow conservatives are “discouraged about the focus on taxes.” Instead, she said, leaders “need to reorient the focus on spending cuts.”

House GOP leaders will bring the focus back to entitlement reform on Wednesday when they meet with Erskine Bowles, a Democrat who co-chaired President Obama’s bipartisan deficit commission that proposed cutting spending, raising revenue and lowering tax rates. (He now helps run Fix the Debt, a group focused solving the debt crisis, especially through entitlement reform.) House Republicans dismissed the commission’s plan when it was released two years ago, but now say they embrace its approach, particularly the spending cuts. Boehner aides suggested they would discuss a plan Bowles proposed last November to the so-called super committee -- the congressional panel whose failure to reach a deficit reduction agreement resulted in the impending sequestration cuts -- which proposed, among other changes, $100 billion in savings by raising the Medicare eligibility age.

House leaders will also meet with business leaders, some of whom have already met with Obama.

The tone and rhetoric used by both sides when making their cases to the public figure to indicate where things are headed. But for now, the dueling campaigns suggest it will be some time before anyone blinks. “If Obama is not going to sign anything that doesn’t raise taxes, it sounds like a stand-off,” said Chris Chocola, president of the conservative Club for Growth. “I don’t think House Republicans will say anything about raising tax rates. . . . I don’t see any of them wanting to run in two years with that commercial.” 

Caitlin Huey-Burns is a congressional reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com. Follow her on Twitter @CHueyBurnsRCP.

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