Why China 'trade war' bill is tying House Republicans in knots (The Christian Science Monitor)

Washington – The bill to punish China for manipulating its currency – and allegedly stealing American jobs – is setting off a clash within Republican ranks on Capitol Hill.

The bill, which would impose tariffs on Chinese goods, has already passed the Senate with bipartisan support and would likely pass the House if brought to the floor. But so far, House Speaker John Boehner refused to do so.

With multinational corporations and conservative antitax groups – key Republican constituencies – opposed to the bill, Mr. Boehner has been loath to let it see the light of day, given that it could be vetoed by President Obama anyway.

How much do you know about China? Take our quiz.

But pressure on Boehner is mounting. Lawmakers representing states hardest hit by the rise of Chinese manufacturing want to go on the record supporting the bill, and GOP presidential hopeful Mitt Romney has taken a stand on China currency even more aggressive than the Senate bill.

Boehner has called the measure “very dangerous.” His concern is that raising tariffs on Chinese goods could spark a damaging trade war at a time when the economy is ill-suited to absorb another blow.

“I have made my position pretty clear that I’ve got grave concerns about this bill,” he added at a briefing on Wednesday. For Congress to act now “poses a very severe risk of a trade war and unintended consequences that could come as a result.”

RECOMMENDED: How much does US-China trade hurt American workers? Slowly, a clearer picture.

Boehner is asking the president to stick his neck out and clarify whether he would veto the bill. a€?Ita€?s time for the president to lead,a€

China's manipulation of its currency has long angered Washington. But the current jobs crisis has given the issue added impetus. Backers of the bill say that, by keeping the value of its currency artificially low, China gives its goods as much as a 30 percent price edge in US markets and a comparable disadvantage for American goods in China. The Senate bill would authorize economic sanctions if a trading partner is found to be maintaining its currency at an artificially low level to gain a trade advantage.

China has already signaled its displeasure. It let the value of its currency sink for the second day in a row on Thursday – a move analysts interpret as a rebuff of the Senate vote.

For their part, major US corporations are also worried.

“The American companies who have become invested in China don’t want change,” says Peter Morici, former chief economist at the US International Trade Commission and a professor at the University of Maryland.

“American companies like GE and Caterpillar, who have outsourced American jobs and corporate functions to China and are now clients of Beijing’s protectionism, have convinced President Obama the China currency bill is protectionist and would start a trade war,” he adds.

Technically, the bill has already come to the House floor for a vote. But Democrats brought it up via a highly partisan legislative procedure that would have also forced Republicans to vote against a popular trade bill with Colombia, so the motion failed. But GOP senators are pushing House Republicans to take up the bill themselves.

“You’re miscalculating where the country is on this issue,” said Sen. Lindsey Graham (R) of South Carolina, in remarks addressing House Republicans at a briefing on Wednesday. South Carolina has lost some 41,800 jobs due to trade with China since 2001, according to a recent report by the Economic Policy Institute.

A critical mass of House Republicans are on record supporting the aims of the Senate bill. A similar House measure attracted 63 Republican sponsors, despite opposition from House GOP leaders. Overall, the bill has 225 sponsors – enough to pass the bill.

In 2010, when the House was in Democratic hands, 99 Republicans voted to back a similar bill, which passed, 348 to 79, but was never taken up by the Senate.

Supporters say that if a currency vote is to occur in the House this time, it’s going to require action on the presidential level – or a stronger push from public opinion. If Obama commits to signing the bill, it puts renewed pressure on House GOP leaders.

At the same time, should former Massachusetts Governor Romney pick up momentum in the GOP primary, his outspoken stands on China trade could also have more sway with House Republicans.

In his economic plan, released Sept. 5, Romney called for confronting China on trade abuses. He pledges on Day 1 to issue an executive order listing China as a currency manipulator and directing the Department of Commerce to assess countervailing duties on Chinese imports, if China does not quickly move to float its currency.

“I'm afraid that people who've looked at this in the past have been played like a fiddle by the Chinese,” said Romney at a presidential debate in Hanover, N.H., on Tuesday. “And the Chinese are smiling all the way to the bank, taking our currency and taking our jobs and taking a lot of our future. And I'm not willing to let that happen.”

“Governor Romney last night couldn’t have been clearer,” said Sen. Jeff Sessions (R) of Alabama, a Senate sponsor of the China currency bill. “I was very pleased with what he said.”

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Republicans criticize tax on millionaires idea (Reuters)

WASHINGTON (Reuters) – Republican leaders on Sunday criticized President Barack Obama's proposal for a new tax on millionaires, calling it "class warfare" and predicting it will face heavy opposition in Congress.

Obama is expected to propose a "Buffett Tax" on Monday on people making more than $1 million a year as part of his recommendations to a congressional super committee seeking long-term deficit savings.

Paul Ryan, chairman of the House of Representatives Budget Committee, and Mitch McConnell, Senate Republican leader, said the proposal would limit growth and hurt corporate investment in an already stagnating economy.

"It adds further instability to our system, more uncertainty and it punishes job creation and those people who create jobs," Ryan said on Fox News Sunday. "Class warfare may make for good politics but it makes for rotten economics."

McConnell said Congress had already debated the issue last year, when Obama and Republicans forged a compromise that extended the reduced tax rates, approved during the administration of George W. Bush, for high-earners for two years.

"It's a bad thing to do in the middle of an economic downturn," McConnell said on NBC's Meet the Press. "There is bipartisan opposition to what the president is recommending already."

The "Buffett Tax" refers to billionaire U.S. investor Warren Buffett, who wrote last month that rich people like him often pay less in tax than those who work for them because of loopholes in the tax code, and can afford to pay more.

Obama will lay out his recommendations in White House Rose Garden remarks at 10.30 a.m. EDT on Monday and is expected to urge steps to raise tax revenue as well as cuts in spending.

MANDATE TO SEEK SAVINGS

The super committee of six Democratic and six Republican lawmakers must find at least $1.2 trillion in deficit savings before the end of the year to avoid painful automatic cuts, and is mandated to seek savings of up to $1.5 trillion.

Those savings are on top of $917 billion in deficit reduction agreed to in an August deal to raise the U.S. debt limit and Obama wants it to go further.

The populist proposal for a millionaire tax would appeal to Obama's Democratic base heading into the 2012 election, setting the stage for a battle with Republicans over tax and spending priorities.

"I just think that's a political move by the president," Republican U.S. Senator Lindsey Graham of South Carolina said of the millionaire tax on CNN's State of the Union.

"When you pick one area of the economy and you say, we're going to tax those people because most people are not those people, that's class warfare," he said.

Senator Dick Durbin of Illinois said on CNN that the proposal to raise taxes would be a good idea as long as it targeted "the wealthy and comfortable and those who wouldn't even notice it."

Congress also is considering Obama's jobs-creation proposal sent to them earlier this month. Durbin, the No. 2 Senate Democrat, said a Senate vote on Obama's jobs plan would likely come in October.

(Writing by John Whitesides; Editing by Philip Barbara)

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Republicans may never get 2012 dream candidate (Reuters)

WASHINGTON (Reuters) – Republicans still hoping that another candidate will jump into the presidential race and give the party a better chance of defeating President Barack Obama in 2012 may need to get over it.

Now that Texas Governor Rick Perry has thrown his hat in -- and become a favorite -- chances are growing slimmer that another contender will jump in and make a splash.

With state-by-state nominating contests starting early next year, it will be very difficult for a newcomer to raise the money and set up a campaign apparatus to defeat other Republican candidates who have been in the race for months.

And, barring a major stumble by leading contenders Mitt Romney, Michele Bachmann and Perry, most analysts expect a leader will emerge in the field not far into 2012.

"Between Romney, Perry and Bachmann, they have a lot of the current buzz and the current spectrum of the electable Republican Party covered," said Nathan Gonzales, deputy editor of the independent Rothenberg Political Report.

"If there were a perfect candidate, they would have been in the race already," he said.

Some Republicans want a new candidate because they feel Romney has failed to generate excitement, and that the former Massachusett governor's political record -- particularly his state healthcare plan in Massachusetts that was a model for Obama's healthcare overhaul -- is too liberal for conservatives.

They worry that Perry and Minnesota congresswoman Bachmann, both strongly outspoken fiscal and religious conservatives, will struggle to attract the independent voters the Republican candidate will need to win the general election.

"That leaves a large part of the Republican middle that's essentially open and people sort of yearn for a consensus candidate," said Joe Schmuckler, an investment manager who was chief financial officer for John McCain's 2008 campaign.

Several names have come up repeatedly as possible new Republican contenders, but most either insist they are not running or come with issues that would complicate their campaigns should they choose to run.

PRESSURE ON CHRISTIE?

The name of New Jersey Governor Chris Christie, 48, comes up most often, although he took office only last year and has repeatedly said he is not ready to be president.

Many analysts consider Christie the person most likely to be pulled into the nomination race if no strong favorite emerges in the coming months.

Christie, known for a brash style and a low-tax, lean-government agenda, said again last week that he is not running after a report, later retracted, that he had set up focus groups to assess his chances on the national stage.

Wisconsin congressman Paul Ryan has reportedly been encouraged to run by top Republicans, and is said to be considering it. But the 41-year-old is best known nationally for an effort to overhaul the government's Medicare insurance plan for older Americans that drew widespread protests.

Within the Republican Party, Ryan would face heat for his past willingness to cross party lines. He voted for Obama's auto industry bailout and the $700 billion TARP bank bailout program reviled by many conservatives.

Marco Rubio, 40, a Republican senator from Florida, is another name that has come up, but he was also elected only in 2010.

If he joins the race, his career trajectory -- running for president after just a short career in the U.S. Senate and a stint in the state legislature -- will look remarkably similar to Obama's.

All three men's lack of experience would make them vulnerable to attacks by rivals who blame the country's economic woes and other problems on Obama's inexperience.

They also have years ahead in which they can run for national office, and at least in 2016 they would not have to face a strong Democratic incumbent.

Dan Ripp, president of Bradley Woods & Co. in New York, who advises investors on government policy, said maybe people are learning a lesson that a candidate is not ready for presidency "just because you've got a great bio and you've got great rhetoric and you inspire hope and change. Experience counts for something."

Former Alaska Governor Sarah Palin and Rudy Giuliani also are said to be considering the race.

Palin has toyed with a presidential bid for months, but, while she has a core of support among Republicans, the 2008 vice presidential nominee is seen as a polarizing figure and opinion polls put her behind Obama in a hypothetical race.

Giuliani, New York's former mayor, made a run for president in 2008 which failed despite raising $55 million, and his position on social issues is to the left of most Republicans.

(Editing by Alistair Bell and Mohammad Zargham)

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Republicans Perry, Bachmann share stage in Iowa (Reuters)

WATERLOO, Iowa (Reuters) – Two of the leading Republican candidates for president avoided confrontation on Sunday as they attended the same Iowa fund-raiser to court the party's social and religious conservatives.

Texas Governor Rick Perry, already seen as a leader in the field despite just entering the 2012 race on Saturday, and Michele Bachmann, the Minnesota congresswoman aligned with the Tea Party movement, shared a stage and struck the same tune.

"Everybody's got their own issues that matter, but at the end of the day, getting America working again is what the bulk of the people really care about," Perry told a swarm of reporters shortly after arriving in the venue.

During an interview with Radio Iowa a few hours before the Sunday evening event, Bachmann avoided directly criticizing or challenging Perry. Instead, she focused on her victory in the Iowa straw poll on Saturday, calling it "step number one in a long journey."

"I intend to earn every Iowan's vote," she said.

Perry had been expected to enter the race for weeks, setting the stage for a fight with Bachmann to win the support of social conservatives. Already, his entry has voters, even Bachmann supporters, considering a switch to Perry.

John Sabbath, 79, of Cedar Falls, said Bachmann has "the right philosophy" on economics, but "down the line" he might be interested in another candidate like Perry.

"We don't know that much about Rick Perry," he said. "We know some, but not a lot."

Steve Sukup, a businessman, former state legislator and 2002 Republican candidate for governor of Iowa, suggested Perry and Bachmann would make good running mates.

"I think we're seeing the ticket tonight," said Sukup. "I think he's just a solid conservative. He's got the right background ... and then Michele has tremendous enthusiasm."

The event was held in the Electric Park Ballroom in Waterloo, Iowa, a venue Bachmann chose for her own "homecoming" event in June, the evening before formally launching her candidacy with a speech in downtown Waterloo.

Perry told reporters he would spend "a lot of time in Iowa" as part of a broad national campaign in all 50 states. Iowa holds the first vote on party nominees for presidents in early January, followed by New Hampshire and South Carolina before building to multiple states by the end of March.

"We're a long way until the end of the race, and it's a marathon, not a sprint," Perry told reporters. "So we're going to be running hard and spending a lot of time in Iowa, New Hampshire and South Carolina and lots of other states."

(Reporting by Kay Henderson; Editing by Todd Eastham)

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Republicans compete in Iowa as Perry jumps in (Reuters)

AMES, Iowa (Reuters) – Six Republican presidential hopefuls competed on Saturday in the Iowa straw poll, an unofficial test of campaign strength, as Texas Governor Rick Perry formally launched a White House run that could reshape the 2012 race.

Voters swarmed the straw poll site and lined up early to cast a ballot in the nonbinding mock election that traditionally winnows the Republican field of poor performers and boosts those who do better than expected.

Perry issued a statement formally declaring his candidacy ahead of a speech to a gathering of conservatives in South Carolina, another state with an early nominating contest.

"It is time to get America working again," Perry said in the statement. "That's why with the support of my family and an unwavering belief in the goodness of America, I declare to you today my candidacy for president of the United States.

The straw poll and Perry's campaign launch, coming less than six months before Iowa residents hold the first presidential nominating contest, promise to reshuffle the field in the Republican race for the nomination to challenge President Barack Obama in 2012.

Perry, a staunch social conservative with a strong job creation record in Texas, is expected to immediately vault into the top tier of contenders along with front-runner Mitt Romney. Perry visits Iowa on Sunday.

At the straw poll, candidates pleaded for support as dozens of buses carrying supporters rolled into the site. Lines were long at the tents hosted by Tim Pawlenty and Michele Bachmann, who are competing for the votes of the social conservatives who dominate the Iowa nominating contest.

Romney will be on the ballot but chose not to participate after winning the straw poll in 2007. He later lost the Iowa caucuses to Mike Huckabee, who rode the momentum he generated with a surprise second-place straw poll finish.

The poll, a fund-raiser for the state party, created a carnival atmosphere around Iowa State University's basketball arena, where candidates enticed supporters with big-tent entertainment, free food and speeches.

Any Iowa resident over 18 could show up and participate, with many allowing a candidate to buy their $30 ticket. Candidates organized the buses to haul in supporters from around the state in a warm-up for the organizational effort needed in the caucuses.

Clara Bulens of Grinnell said she voted for Bachmann because "she's beautiful, brilliant, very personable and I love her platform."

PALIN NOT A FAN

Not all of the candidates are fans of the event. Sarah Palin, the 2008 vice presidential nominee who is still flirting with a White House run, questioned its validity during a visit to the Iowa state fair on Friday.

"It's not always the tell-tale sign of what the electorate is feeling," Palin said of the poll. "It's who happens to show up and has the time and energy to spend that day for their particular candidate."

Pawlenty and Bachmann have the most at risk. They are vying for the same conservative supporters and both need a win in Iowa's caucuses in 2012 to have a viable path to the nomination.

Bachmann's appeal to both Tea Party fiscal conservatives and social conservatives has shot her to the top of opinion polls in Iowa, but a flat performance by the Minnesota congresswoman could puncture her early momentum.

Pawlenty, the former Minnesota governor, is mired in single digits in state and national polls and needs a strong showing to keep his campaign alive. He ripped Bachmann's record in Congress during a debate on Thursday at the straw poll site.

Four other Republicans -- U.S. Representatives Ron Paul and Thaddeus McCotter, businessman Herman Cain and former Senator Rick Santorum -- also paid the fees and bought tents and speaking time at the event.

Romney, along with former House of Representatives Speaker Newt Gingrich and former Utah Governor Jon Huntsman, did not pay to participate in the straw poll but will be listed on the ballot.

(Editing by Mohammad Zargham)

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Republicans back new revenues in debt deal: Kyl (Reuters)

WASHINGTON (Reuters) – Republicans have tentatively agreed to between $150 billion and $200 billion in increased revenues in budget talks, Republican Senator Jon Kyl said on Wednesday.

"If the government sells something and gets revenue from it, that's revenue. If there is a user fee of some kind and we want to raise that to keep up with the times, that's revenue. And if you add up all of the revenues that we Republicans have agreed to, it's between $150 billion and $200 billion," Kyl said on the Senate floor.

(Reporting by Andy Sullivan and Richard Cowan; Editing by Philip Barbara)

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Obama tweets for the first time, tweaks Republicans (Reuters)

WASHINGTON (Reuters) – U.S. President Barack Obama took to Twitter on Wednesday to press his economic agenda, using the popular social media site to tweak Republicans and advocate for a deal to reduce the deficit.

In a "town hall" style meeting that lasted about an hour, the president fielded questions posted by users of the Twitter site and sent his first live tweet from a laptop in the White House East Room -- making what he called presidential history.

Sitting on a tall stool with a screen that showed tweeted questions nearby, Obama responded aloud before an audience of 140 invited guests who came to the White House for the event.

That number was a nod to a key part of "tweeting."

Twitter users send short, 140-character messages through the Internet about issues large and small.

The White House has tried using Twitter and other new media outlets to reach American voters, sometimes making announcements that way instead of through more traditional journalistic venues. The White House's @whitehouse account has some 2.25 million followers.

Obama, who is not known for brevity, touched on topics ranging from the weak housing market to NASA to the debate about the U.S. debt ceiling.

He did not stick to concise answers and did not send further tweets himself.

"One last point -- I know Twitter, I'm supposed to be short," he said while answering a question about education, drawing some laughter.

Another funny moment came when Republican John Boehner, Speaker of the House of Representatives, managed to get in a question through a Twitter message of his own.

"After embarking on a record ... spending binge that left us deeper in debt, where are the jobs?" read the moderator, Twitter co-founder Jack Dorsey, from Boehner's tweet.

The tweet had some typos, however.

"First of all, John obviously needs to work on his typing skills," Obama joked.

"Obviously John's the speaker of the House. He's a Republican. And so, this is a slightly skewed question."

Obama went on to say that the United States had not seen fast enough job growth relative to U.S. needs.

HOUSING WOES

Asked by one Twitter user what mistakes he had made in office, Obama singled out the moribund housing market.

"The continuing decline in the housing market is something that hasn't bottomed out as quickly as we expected," he said.

"We've had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up."

Obama is locked in a dispute with congressional Republicans about how to reduce the U.S. deficit and raise the debt ceiling, and he used many of his answers during the town hall to press his case for ending tax loopholes while reducing spending.

He said the country could face a second recession or worse if Congress did not raise the borrowing limit and suggested Republicans were using the debate like a gun to the head of the American people to support tax breaks corporate jet owners and the wealthiest Americans.

The Twitter town hall came after hackers took control of a FoxNews.com Twitter account on Monday, sending six false tweets saying Obama had been shot dead and prompting an investigation by the Secret Service.

Obama was at home at the White House on Monday, celebrating the July 4 holiday with his family.

The White House has declined comment on the hacking event.

(additional reporting by Laura MacInnis and Matt Spetalnick; Editing by Cynthia Osterman)

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Republicans firm on taxes ahead of Obama meeting (Reuters)

WASHINGTON (Reuters) – The Senate's top two Republicans on Sunday stood firm against including tax increases in any deal to raise the debt limit and shrink budget deficits one day before a meeting with President Barack Obama, but said the showdown need not go down to the "11th hour."

Obama is to meet separately with Senate Democratic and Republican leaders on Monday to try to revive negotiations that collapsed on Thursday when Republicans walked out over Democrats' demands for tax increases.

Sending a message to Obama in appearances on Sunday news interview shows, Senate Republican leader Mitch McConnell and Jon Kyl, his deputy in the leadership, presented a unified front demanding spending cuts and opposing tax hikes.

"We have a spending problem. We don't have a problem because we tax too little," McConnell said on the ABC program "This Week."

"We need to quit borrowing, quit spending, and get us our trajectory heading in the right direction. Throwing more tax revenue into the mix is simply not going to produce a desirable result, and it won't pass," McConnell added.

Obama said on Saturday he remained committed to working with Congress to solve the government's debt problem, but the focus could not be only on spending cuts, as Republicans demand.

The $14.3 trillion U.S. debt ceiling must be raised before August 2 or the Treasury Department will run out of money to pay the nation's bills. A default on debt payments could send markets plunging globally and raise the risk of another U.S. recession.

"One of the reasons we are meeting tomorrow (Monday) is that I think both the Democrats and the Republicans would like to come together and finish this negotiation and finish it sometime soon. It need not necessarily go to the 11th hour," McConnell said.

"We need to put something together that will actually pass and make a difference, impress Standard & Poor's and Moody's and the rating agencies that are about to downgrade the U.S. credit rating for the first time in our history," he added.

'KILL THE ECONOMY'

The U.S. federal deficit stands at $1.4 trillion, among the highest levels relative to the economy since World War Two.

Speaking on "Fox News Sunday," Kyl said "we have to try" to get a deal by August 2.

"I think the president has to make a decision -- which is more important to him: solving this problem, reducing spending somewhat, or making sure that we raise taxes on American economy?" Kyl said.

"If you want to kill the economy, raise taxes. Are we going to vote to absolutely put another anchor around the neck of the economy, which is struggling to try to recover here? Absolutely not. It's terrible policy," Kyl added.

Democrats have eased back from their insistence that personal income tax rates need to rise on the wealthiest Americans to focus instead on ending a wide range of tax breaks on everything from corporate jets to oil and gas subsidies.

They have also proposed closing tax breaks that benefit the wealthy, such as limiting the deductions for households making more than $500,000 a year.

Republicans control the House of Representatives while the Democrats control the Senate.

Appearing on CNN's "State of the Union" program, House Minority Leader Nancy Pelosi said Democrats must have a say in crafting an agreement, especially if Republicans in the chamber cannot generate enough support on their own to pass a final plan.

Pelosi said any package that only cuts spending is unworkable, suggesting that closing what she and other Democrats call corporate "tax subsidies" for oil companies and other businesses should be included in any deal.

"You cannot achieve what you set out to do if you say it's just about cutting. It has to be about increasing the revenue stream as well. There are many things you can do in terms of special interest loopholes," Pelosi said.

Republican Senator Jim DeMint, a favorite of the conservative Tea Party movement advocating deep spending cuts, said he believes the United States would not default on its obligations if Congress fails to raise the debt ceiling.

"If we add another $2 trillion to our debt without taking control of it, I think you're going to see the markets respond in a much worse way," DeMint said on CNN.

(Reporting by John Crawley, Paul Simao, Paul Eckert and Lucia Mutikani; Writing by Will Dunham; Editing by Vicki Allen)

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Top Republicans insist no taxes in debt deal (Reuters)

WASHINGTON (Reuters) – President Barack Obama will hold separate talks with Senate Democratic and Republican leaders on Monday to try to resurrect stalled negotiations aimed at raising the U.S. debt limit and avoiding default.

Obama will meet on Monday morning with Senate Democratic leader Harry Reid and in the early evening that day with Senate Republican leader Mitch McConnell.

Talks fell apart on Thursday when Republicans walked out over Democrats' demands for tax increases as part of a deficit reduction plan. A deal must be reached by August 2 to avoid a potential default on the country's $14.3 trillion debt.

The top Republicans in Congress, McConnell and U.S. House of Representatives Speaker John Boehner, held fast on Friday to their position that Congress would not accept any tax increases. Boehner said Obama must come to the negotiating table next week with deep spending cuts if he wants a deal.

"The president and his party may want a debt limit increase that includes tax hikes, but such a proposal cannot pass the House," Boehner said in a statement.

The $14.3 trillion U.S. debt ceiling must be increased before August 2 or the Treasury Department will run out of money to pay the country's bills. A default on debt payments could send markets plunging around the world and raise the risk of another U.S. recession.

Boehner said if Obama offers up spending cuts that are at least the size of a debt limit increase -- thought to be around $2 trillion to $2.5 trillion -- and if new budget reforms are put in place, "He has my word that the House will act on it."

These are requirements Boehner and fellow Republican leaders have been voicing for months.

Representative Chris Van Hollen, one of the Democrats who was involved in the failed talks led by Vice President Joe Biden, told Reuters: "What they're saying (Republicans) is 'we have to have everything our way.'"

"They don't want to get rid of tax breaks for oil and gas companies. They don't want to get rid of tax breaks for corporate jets, they don't want to ask the wealthiest Americans to give up some of their tax preferences and they'd rather put the economy at risk" by creating uncertainty over the U.S. credit rating, Van Hollen said.

The Washington Post reported Democrats were seeking about $400 billion in new tax revenues on companies and the wealthy.

"There's not any particular number on the revenue package but we have discussed ... the idea of phasing out some of the tax preferences for very high income individuals, over half a million dollars" as well as ending some corporate tax breaks," Van Hollen said.

(Editing by Jackie Frank)

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Debt talks collapse, Republicans walk out over taxes (Reuters)

WASHINGTON (Reuters) – U.S. budget talks collapsed on Thursday after Republican negotiators walked out, throwing doubt on Washington's ability to reach a deal that would allow the government to keep borrowing and avoid a debt default.
Representative Eric Cantor, the No. 2 Republican in the House of Representatives, said participants had identified trillions of dollars in potential spending cuts but were deadlocked over tax increases sought by Democrats. Republican Senator Jon Kyl also pulled out, according to an aide.
"Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue," Cantor said in a statement.
House Speaker John Boehner, the top Republican in Washington, said Democrats must take tax hikes off the table.
"These conversations could continue if they take the tax hikes out of the conversation," Boehner said.
Negotiators had hoped to reach a budget deal by next week that would give lawmakers political cover to raise the $14.3 trillion debt ceiling before the Treasury Department runs out of money to pay the country's bills.
Default could occur if Congress does not act by August 2, pushing the United States back into recession and sending markets plunging around the globe.
So far, that possibility hasn't affected bond markets as investors focus on other news and assume that Washington will ultimately strike a deal. But that probably won't come until the last minute, analysts said.
The talks are "not dead but they are on life support," said Greg Valliere, a political analyst for investors at Potomac Research Group. "This is going to look ugly for the next few weeks."
DEAL NOT NECESSARILY OUT OF REACH
Vice President Joe Biden was still scheduled to come to Capitol Hill on Thursday, where he will meet with fellow Democrats now that the two Republican members of his deficit-cutting group have dropped out.
The breakdown in talks does not mean that a deal is out of reach. Participants had expected Boehner and President Barack Obama to handle the final negotiations -- a step that now may occur sooner than anticipated.
Cantor had given little indication that the talks had hit a wall. After Wednesday's session, he said he looked forward to talks on Thursday and Friday and indicated that the group was making progress.
"Obviously if we weren't, we wouldn't be meeting again," he told reporters.
His withdrawal caught Democrats by surprise, coming as Obama met with House Democratic leaders at the White House before the afternoon's negotiating session.
"Until our Republican colleagues are more concerned about our need to reduce the deficit than what Grover Norquist has to say, we will have a difficult time," said Democratic Representative Chris Van Hollen, referring to a prominent anti-tax activist.
Republicans have said from the outset that any tax increases will not pass the House. But Democrats thought wiggle room might be possible after Senate Republicans voted to close a tax break for ethanol last week, defying Norquist and other anti-tax activists.
In recent sessions, Democrats have pressed to close a wide range of tax breaks, from oil and gas subsidies to breaks that benefit wealthy individuals. Negotiators had reached tentative agreement on cuts to health benefits, annual spending, other benefits like farm subsidies and tuition aid, and automatic limits on future spending, according to an aide familiar with the discussions. But Democrats would not relent on taxes, the aide said.
REPUBLICANS MAY NOT HAVE THE VOTES
Republicans may not have enough votes to pass a deal through the House in any case, as many newly elected conservatives feel little urge to compromise.
That means Boehner may have to rely on Democratic votes, and Democrats will insist that tax increases must be part of the deal, one lawmaker said.
"I think we walk away unless there's some revenue raisers," Democratic Representative Allyson Schwartz said at a breakfast event hosted by Third Way, a centrist think tank. "It is going to take a bipartisan effort to get this done. That's something Republicans need to realize and we're not there yet."
The decision to leave the talks may be an effort to buy some breathing room from his right flank, one analyst said.
"One can hope Cantor, by leaving the talks, is just trying to shore up his reputation with the hotheads in the House before actually coming to an agreement," said Cary Leahey, managing director of Decision Economics in New York.
Cantor and Boehner may need to allow a debt-ceiling vote to fail before they can craft a compromise, budget expert Stan Collender said. That could provide a jolt to markets akin to the failed bank bailout vote of 2008, which caused the Dow Jones Industrial Average to drop 800 points.
"There may need to be a negative market reaction to that vote to get Republicans to move from their current position," said Collender, a budget analyst with Qorvis Communications.
One Democratic aide said Cantor recognizes that tax increases will have to ultimately be part of any deal but that he did not want to be the one to say so.
"Cantor just threw Boehner under the bus," the aide said.
(Additional reporting by Kim Dixon and Donna Smith in Washington and Ellen Freilich in New York; editing by Jackie Frank)
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