Boehner Nixes Tax Increase Deal from Obama

As of this writing, the prospects of a grand bargain between the White House and congressional Republicans for spending cuts and limited revenue increases has collapsed. The reason is President Barack Obama's insistence of a $1 trillion tax increase.

Ed Morrissey reports in Hot Air that Obama also seemed to back off on previously agreed to entitlement reforms, apparently under pressure by liberal Democrats. House Speaker John Boehner nixed the deal and walked out of the talks in a move many pundits are comparing to President Ronald Reagan's at the Reykjavik summit talks with then-Soviet Premier Mikhail Gorbachev.

Gorbachev had offered Reagan a deal that consisted of the elimination of all strategic nuclear weapons in exchange for not going forward with the Strategic Defense Initiative. Reagan nixed the deal and walked out of the talks. Many at the time decried what they considered President Reagan's "intransigence." However, Gorbachev concluded that he was dealing with a man who was not to be rolled. Subsequent agreements effected deep cuts in strategic nuclear arms, including the elimination of all intermediate range nuclear weapons.

Boehner is obviously gambling that his insistence in not falling for a deal that includes tax increases will convince the White House once and for all that they are a non starter. Like Reagan, he hopes to effect a smaller deal that will create $2.5 trillion in spending cuts over 10 years instead of $4 trillion and a debt ceiling raise that will get the country through 2012. At that point, it is hoped, a new Congress and presumably a new president will be able to strike a better deal that permanently solves the American debt crisis.

Boehner also intends to avoid a situation as in 1990 in which then-President George H.W. Bush was persuaded to go back on his "no new taxes" pledge in exchange for budget cuts. The tax increases were enacted, but a Democratic Congress reneged on promised spending cuts.

Boehner is calming fears by many conservatives that he is about to cave in to Obama's tax increase demands. He has shown classic good negotiating strategy by being willing to walk away from a bad deal. Now the ball is in Obama's court. Will he deal on Republican terms? Or will he continue to play political games while the debt crisis threatens to consume the American economy.

Source: Boehner walks away from $1 trillion in tax increases, Ed Morrissey, Hot Air, July 10, 2011

Reykjavik Summit 1986, Encylopedia.com