Thursday, 31 July 2014
Last updated 1 hour ago
Jun 30 2011 | 12:58pm ET
A combative President Barack Obama insisted yesterday that higher taxes—including higher taxes on hedge fund managers—would have to be part of any plan to increase the federal debt limit.
During a press conference lasting more than an hour, the president blasted congressional Republicans for refusing to compromise on revenue-generating measures to offset deep spending cuts. "Everybody else has been willing to move off their maximalist position," the president said. "They need to do the same."
Democrats, who agreed to as much as $2 trillion in spending cuts during negotiations that were broken off last week by Republicans, are calling for an end to several tax breaks and loopholes. One, the so-called carried-interest loophole, allows hedge and private equity fund managers to pay the much lower capital gains rate on the performance fees they earn.
Obama and congressional Democrats have tabled an end to that loophole, which could more than double the amount of taxes hedge fund managers pay, as well as an end to or reduction in tax breaks on oil and gas companies and corporate jets.
"You'll still be able to ride on your corporate jet," Obama said in one of six mentions of the issue. "You'll just have to pay a little more."
The president added that CEOs and hedge fund managers are paying the lowest tax rates in almost 60 years.
"They can afford" to pay more, he said.
Republicans have tied a deal on deficit reduction to raising the U.S.'s debt limit. The Treasury Dept. said that if action is not taken by Aug. 2, the U.S. will default on its debt for the first time in history.
Despite the sometimes angry rhetoric, Obama said he was confident that a deal could be reached.
"Call me naïve, but my expectation is that leaders are going to lead."
House Speaker John Boehner (R-Ohio) didn't go quite so far in his response, but made clear that Republicans would not accept higher taxes of any kind, saying that such a demand ignores the "legislative and economic reality."
"The longer the president denies these realities, the more difficult he makes this process," Boehner said in a statement.
"This is not a situation where Congress is going to say we won't buy this car or we won't take the vacation," Obama said at the press conference. "They took the vacation. They bought the car. And now they are saying, maybe we don't have to pay."
"If the United States government, for the first time, cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant and unpredictable."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…