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Q/A with House Leader Eric Cantor (R-VA)

Posted by Larry Doyle on July 11, 2011 9:59 PM |

The deficit reduction talks ongoing in Washington have profound implications for our markets, our economy, and truly the global financial landscape.

While President Obama and House Speaker John Boehner garner the bulk of the media attention, do not discount that House Majority Leader Eric Cantor (R-VA) has a very big dog in this fight.

Regardless of your political persuasion or market instincts, those who embrace basic ‘sense on cents‘ always want to know what each and every person engaged in a debate is thinking.

In the process, we can formulate our own opinions as opposed to having the media form them for us. In this spirit, I hope you will take the time to review this statement and Q/A recently released by Representative Eric Cantor.

It is a little lengthy but it is “only” our country’s and our children’s future we are addressing. Please let us know what you think. Thank you to the friend who shared this with me.

Monday, July 11, 2011

Mr. Cantor: Good afternoon. Let me start by giving you my perspective of what happened last night at the White House. 

The President started the meeting out very much like his recent press conference this morning, saying that we all want to or at least he does, want to fix entitlements and we want to cut trillions of dollars of spending. And I think both sides agree with that.

There is no question. We started the year out saying we wanted to fix entitlements, which is why I think we are here having this discussion to begin with, because our budget puts forward a way to try and address the entitlement problem.

But once the President said that, the problem was the deal he then began to discuss, that has since fallen through, had in it over a trillion dollars of tax increases. Our members did not come here to raise taxes. In fact, we went and pulled the Pledge to America, and in the Pledge to America, sprinkled throughout is our pledge not to raise taxes on the American people. So as part of any deal, we are not asking the President to violate any of his promises to the people of this country and we wish he wouldn’t ask us to do the same.

Because if you go back to when the Biden talks began, there was always a category of items that were sort of off limits on both sides. And one for us was we are not going to raise taxes, especially in such a sputtering economy and for them it was always ObamaCare. And every time the discussion started about, well, Republicans need to raise taxes, I would proffer back, then you put ObamaCare repeal on the table. It is the same.

Again, I think the purpose of the Biden talks and hopefully the purpose of where are we are going today is to try and find commonality. Again, the President started out by saying he wants to address the fiscal problems of this country and cut trillions of dollars of spending. We agree.

We all know right now that, well, I don’t know if we say we all know, but certainly it is not time to raise taxes when we are in such a recession. Look at this, this is the President’s very own quote, back in 2009: “You don’t raise taxes in a recession.” The current unemployment rate is 9.2 percent. That is the official rate. I have said before, almost consistently every week, it is counterintuitive to think that you impose taxes on people and businesses right now if you want to get Americans back to work.

So my hope is today we are going to go back into that meeting, the subject of discussion is going to be the details of what the Biden group came up with and try to iron out the differences and see if we can get somewhere. Because at the end of the day, it has always been about how we are going to get 218 votes in the House to pass this thing so we can right this country and get people back to work.

With that, I will take some questions.

Q: Mr. Leader, you have been fairly consistent in talking about how any grand deal that required a trillion in taxes is not acceptable, would not pass the House. But the Speaker seemed to have spoken very favorably about a grand deal. I wonder if there is any division in the GOP leadership since you guys seem to be taking fairly different approaches to that issue.

Mr. Cantor: The Speaker and I are on the same page. We do not believe you should be raising taxes on the American people, especially in this economy. We said it in our Pledge. We are in the same place and what the Speaker tried to do was to address the big issues facing this country, which are the entitlement issues.

We have been through the numbers here before. You know the numbers. The reason why the government’s ledger looks the way it does is because of the situation in the entitlement programs, the health care entitlement especially. So the Speaker tried to see if we could push the President to go along with us, but again, it was evidenced by where the Democrats were in the Biden talks and where the President was, they are for raising taxes, we are not.

Q: What was the reaction that you heard when this grand deal was being discussed? From the Congress. Would you say there was hesitance, what did you hear? What were members saying to you?

Mr. Cantor: There wasn’t a lot of information that was forthcoming. But I can tell you when you look at what the deal was, there was a request for over a trillion dollars in increased baseline, new revenues. There was a request reported that we were going to have to vote on decoupling the Bush tax cuts, the very issue that both sides agreed not to do in December. So how can you sit here and continue those kind of discussions based on tax hikes? I mean, that’s all.

Q: Mr. Leader, the President said today at his news conference that he is willing to take significant heat from his party to get a deal done and expects Republicans to do the same. Are you willing to take significant heat from your party to get a deal done?

Mr. Cantor: I have said before, a vote to increase the debt limit in this country is an existential question for a fiscal conservative because what that does is facilitate more spending. And that has been my point all along in these discussions. These votes aren’t easy. Taking away entitlement benefits from people is not something that is pleasurable. Okay?

But we are trying to get the fiscal house in order here. So there is plenty of so-called shared sacrifice for all here. This is not an easy thing to do. As I said before, the Biden group had been a very substantive forum for discussion. We will go back to the White House today to begin to talk, yet again, about where we left off in that group without any discussion of raising taxes.

Q: Do you think it will be easier to reach an agreement using the Biden talks as a framework when, in fact, those ran aground on the issue of taxes as well?

Mr. Cantor: What is the question?

Q: Do you think it will be easier to reach a deal using the Biden talks?

Mr. Cantor: Easier than what?

Q: Than the grand bargain that was on the table last week.

Mr. Cantor: Again, the grand bargain on the table which the Speaker has rejected has no tax hikes in there. That is why I believe that deal was rejected. So what the Biden group produced were areas that we believe we can come to agreement on.

Now, the Vice President always said nothing is agreed upon until everything is agreed upon. I assume we are now at the stage where we are trying to get everybody in agreement. That is why the refinement of discussion of items is going on.

Q: Is there any scenario in which the Speaker agreed to a deal that you could not support?

Mr. Cantor: No, I think we are on the same page. I know you all love to write the soap opera here. And it is just that, it is something that I think belittles the real question here and that is the difference between the sides and that is between the fact that Barack Obama wants to raise taxes and Republicans don’t.

This is about trying to understand that that difference is there. Republicans, the Speaker and I are united in saying we don’t want to raise taxes on the American people. Our conference is united and we have said as he set out the goal, that we would like to cut spending more than what we raise the debt limit without raising taxes. And that is the goal.

Q: Mr. Leader, you have previously identified that the Biden groups that the Biden came up with 2 point something trillion in identified savings, not agreed upon savings. Yesterday and today, Chris Van Hollen was saying it is really more in the area of $1 trillion. Can you speak to whether there really is agreement and how much further you need to go?

Mr. Cantor: Andy, I am in the room for these talks. I was in the room with Van Hollen and the talks. And I sat here last week — when you are talking about the non health care mandatory area, we have roughly in the neighborhood of $300 billion, in the health care mandatory area we have roughly in the neighborhood of $350 billion, in the discretionary area we are in the $1.1 trillion and we hope to be in the $1.3 trillion area. When you’re talking interest, you are roughly in the $330 to $350 range.

So Chris can say what he wants and we have more discussions to be had. Again, nothing is agreed upon until everything. But that was the real fruit, I think, and benefit of the Biden talks, that the Vice President put the context out there to try and set aside differences to see if we could come together and identify a blueprint. That’s all this is.

Q: Mr. Cantor, even if you were to get to these 2.4 trillion in spending cuts, whatever that adds up to that you just listed off, that is over 10 years. You’re going to try to convince Republicans to vote for a debt ceiling increase to get you for another 2 years. What is the challenge in that, in making that argument if you come back with a challenge that is 2, 2 ½ , 3 years over time?

Mr. Cantor: Yeah, it is a challenge. Because listen, our budget had a lot more potential savings without raising taxes and I would hope that we could get more. The Speaker set the goal out that we are going to exceed the amount we raise the debt limit and we are going to do so without raising taxes and think about what priority is right now. It is to get the fiscal house in order.

This is a down payment. We understand the election battle in November 2012 is going to be much about the future of how this country runs its entitlement programs and constructs its safety net for those who need it and frankly not for those who don’t.

These are fights that we will continue to have. But right now I’m hopeful we can get this done and start talking about jobs. Look at the job numbers last week. I know it much rattled the White House because he owns the economy, and what we like to do is to get on to a discussion about why the economy looks the way it does so we can offer some prescriptions to reverse some of the policies that are in place so people can get back to work.

Q: You’re pushing the Biden framework here. But how do you get to this next discussion if you are pushing the Biden talks now but you walked away from them before because the issue is taxes? How is this going to move at all?

Mr. Cantor: Let me just sort of maybe correct, I am not pushing. The President asked us to come back today with the details of what we took from the Biden talks. That is what we are doing.

Q: When you say that any new tax revenues should be offset with tax cuts elsewhere, would that potentially extend to sort of a major distributive effort by permanently fixing the AMT or something like that? Could you raise a whole bunch of revenue and then offset a major tax cut?

Mr. Cantor: Again, I don’t want to get into the specifics, I certainly don’t want to negotiate here. But as I said last week, if the President’s priorities are these loopholes like corporate jet owners and the rest, we are willing to talk to the President about that but we are going to require offsetting tax cuts because the commitment for us again in our Pledge is we are not raising taxes. So it has to be net revenue neutral.

Q: Leader Cantor, on this issue of a grand bargain, does the fact that the Speaker was even talking about something of that size with as you said a trillion dollars in revenue increases, did he misjudge where the House Republican conference is?

Mr. Cantor: I don’t think so because the Speaker never agreed to that. He never agreed to the trillion dollars of new taxes. Again, my sense is that is why those talks ended is because he just couldn’t get the Administration off of the fact that they want to raise taxes.

Again, I had discussions last night in the cabinet room and it is very clear the difference. It was clear in the Biden talks and it is clear in here and it is clear in the discussions that came out of what the Speaker tried to do with the President. We don’t believe you ought to be raising taxes on people right now in this recession and this economy and they do. That is just an irreconcilable difference. And if the President wants the debt ceiling raised, we are not going to go along and raise that if they want to raise taxes. That is just what it is.

Q: The President went to great length today to say he doesn’t want to raise taxes on people in this economy. He wants to wait a couple of years until 2013. Is that a better time to raise taxes on the American people?

Mr. Cantor: No. Come on. Let us think about this right now. I don’t think many people defend the way that this building spends money and the way that this town spends money.

So when you’re asking to put more money into a formula that doesn’t work, that is like throwing good money after bad. We are trying to fix the system here. We are not for raising taxes.

We are for trying to send a signal that we are going to get things straight here and we are not going to burden small business people or those looking to invest, that maybe not this year but maybe next year your taxes are going up. That doesn’t make sense.

Q: Mr. Leader, you talked about 2.4. You mentioned that figure before. But now the estimates just to extend just the middle class tax cuts, the ones agreed upon both the Administration and Republicans is $2.5 trillion over 10 years. Where will there be any net deficit reduction if you come in with a package that is less than the cost of extending just even those middle class tax cuts?

Mr. Cantor: What we are trying to do right now is look at the problem before us, and that is the President’s request that we raise the debt ceiling in this country. I have said here before and I’ve said it three or four times today, our goal is to meet what the Speaker set out, more cuts than the amount we are going to raise the debt ceiling without raising taxes.

We have the expiring taxes at the end of next year before the election that we will have to deal with for sure, which is the same fight we had last election. Again, it has only gotten worse for people because the confidence is waning in this country while this unemployment continues to linger. We are trying to do something to address that.

Q: Sir, if these talks don’t work out, what would you see as the feasibility and the pros and cons of passing on your own, first of all, a short term or secondly a medium sized –

Mr. Cantor: My intention here today is to go in and see if we can find commonality to meet the goal that has been set out by the Speaker, and I’m hopeful we can get it done.

Q: The President said that he is not going to sign anything unless he personally is paying more in taxes. How is that ever going to be resolved?

Mr. Cantor: You know what? He can write a check any time he wants. So again, I think that is easily met.

Q: What is at the table now that is a compromise from your end? What is already out there being discussed that you would say is a compromise from the position you came with?

Mr. Cantor: The fact that we have been discussing voting for a debt ceiling increase. Again, I don’t think the White House understands how difficult it is for fiscal conservatives to say they are going to vote for a debt ceiling increase.

My position has always been, look, we expect people in this country to pay their bills. People expect the government to pay its bills. You start with that premise. These are bills that have been racked up in the past.

What we owe the people that put us here was to show them that we are going to change the way that is done. That is the goal here. Again, the Democrats don’t want to do anything without raising taxes that is not a sensible position while we are in this economy. Republicans have said in a very straightforward fashion, we understand the fiscal challenges here. Let us start to address them if you want to continue to borrow money to function.

Q: One option that hasn’t come up for a while is a clean raising of the debt limit, that wouldn’t include any tax increases and it would avoid letting the country default.

Mr. Cantor: I think if you asked Leader Pelosi she is a big supporter of that.

Q: Do you think that would be a feasible –

Mr. Cantor: No, no. I think you’ve seen the vote on the House floor about what that result is.

Q: If a default would be a bad thing for the economy, as Speaker Boehner said the other day, why is voting or even discussing raising the debt ceiling to avoid that a major concession by Republicans? Wouldn’t just not voting be a disastrous thing?

Mr. Cantor: The markets are smarter than to just accept, as you call it, a clean vote on the debt ceiling. They are looking to see that we are going to be a debtor nation that actually can get our act together, can fully amortize our debt and begin to grow again, so we can shrink the amount of debt. Just checking the box and making the payment, if you will, is not going to satisfy savvy investors out there who know the fiscal situation in this country.

Q: Does that mean that interest rates would not skyrocket but that debt would not in fact get more egregious?

Mr. Cantor: No. Listen, I accept Secretary Geithner’s claims that if we go beyond the date of August 2nd, that there will be a downgrade and interest rates that go up will quickly wipe out any savings potential that we are working on here.

Which is why it is imperative that we all come together on this notion, both the fact that markets are smarter than that, they are looking for reforms, and the fact that there is some urgency because of the risk of rates going up and the potential that that has to reduce or wipe out the savings that we are trying to achieve.

Q: Mr. Leader, do you share the President’s professed principle I know you have many differences in policy. Do you share his professed principle of shared sacrifice? And if so, where you talked about the political sacrifice of the debt limit, though. But in terms of shared sacrifice across the country, do you see that one as necessary? And if so, where do you see it happening, sharing?

Mr. Cantor: Look, I think behind this notion of “we want shared sacrifice” that they continue to say means “we want to raise taxes” and we don’t accept that you raise taxes in an economy like this.

Q: Do you see sharing in a different way than that?

Mr. Cantor: I go back to you and I tell you these are tough votes for everybody. Nobody relishes the opportunity to go and cut these programs. There are people that are hurting out there. You don’t leave things the way they are, or tax people that have the potential to help people who are hurting by creating jobs, and say that that is a good result. I mean, that again is just nonsensical.

Q: You say that the situation boils down to President Obama wants to raise taxes and Republicans don’t. President Obama isn’t the only one who is seeking revenues as part of a solution to the long-term deficit and debt problem, the bipartisan commission said that same thing. He says that the situation boils down to he wants to address the long-term debt situation, and Republicans don’t.

Mr. Cantor: How in the world can you even accept that notion when we have taken the opportunity first off and put our budget out there. We wouldn’t even be having these discussions about addressing long-term problems if we had not taken the position that we had proffering our budget.

I really do credit Paul Ryan and the Committee that put that out there for starting this discussion. Again, that is laughable on its face to sit here and say we don’t want to do that. We don’t want to go and raise taxes on people in a tough economy. That is what it comes down to right now. The President and his party do.

Q: What Democrats point out is that it actually is getting into the tough negotiation, you’re the one that left the Biden talks, Boehner now leads the dismisses the big plan.

Mr. Cantor: Because it is all over the same issue. Again, we were having six to seven weeks of discussion, however long the Biden talks lasted, and we were setting aside differences and saying let us look to see where we are going to cut. The President said he wants to cut trillions too. But when it got to raising taxes, that’s when those talks stopped. When it got to raising taxes, that’s when the Speaker said, no, we are not going to raise taxes. It is that simple.

Q: Are you prepared to walk out of these talks as well?

Mr. Cantor: I certainly don’t want to walk out of these talks. I think the message has been heard in the White House from what I stated yesterday, that we are not going to raise taxes. The votes aren’t in the House to raise taxes. If they want to vote on the debt ceiling, they are going to have to come meet us and we are going to have a package that does not have any net new revenues.

Q: Are you going to yield at all to their –

Mr. Cantor: We are not going to raise taxes. That’s all. There are no votes to raise taxes here.

Q: Is there room for any concession other than making that difficult vote on raising the debt ceiling? That is the only concession?

Mr. Cantor: I am sorry. I’m not following you.

Q: In terms of concessions that might be made to come towards an agreement, is there room –

Mr. Cantor: Again, behind that question is the assumption that there haven’t been concessions made already within these areas that we discussed. There are all kinds of decisions that have to be made, and different viewpoints come together on every line that we discuss. Again, this notion that somehow we are not contributing to this discussion and being constructive is just not true.

Q: What are some of the big ones? What are some of the big concessions that have been made on those line-by-line items?

Mr. Cantor: Again, I don’t want to get into the specifics now. I don’t think it is appropriate. I can tell you if you look at the kinds of changes that we would like to see in health care. We believe strongly that the answer to health care in this country is to move towards consumer based health care where individuals have more choice, where there are incentives in place to drive down overutilization of the system. The Democrats don’t share that notion.

We can’t have everything we want when we are talking about trying to change health care. That is just a broad picture of the kind of discussions that we have in some very costly areas.

If you go back to say that we relish the notion of reducing benefits, it is not true. We are all in this together. And again, it is going to come down to the question of raising taxes or not. Last night the message I had for them was that we are not. We said it in the Biden talks, the Speaker said it, and now I said it again in that discussion last night.

Q: Mr. Leader, have you had talks with Democrats about this approach that you mentioned last week about agreeing to closing some tax breaks in return for tax cuts elsewhere? Have you guys been talking about how that could work out and what the tradeoffs would be?

Mr. Cantor: I mentioned it last night and I’m sure that we will have to get into the specifics at some point.

Thank you very much.

Wow. Cantor truly seems determined. I do NOT think he wants to raise taxes, do you?

How this plays out over the next few weeks will be absolutely riveting. The stakes are astronomical. The political theatre will certainly provide extensive media coverage. That said, let us not be mistaken, though, this is not about the theatre. The simple fact is both parties have had a very real hand in bringing our nation to the edge of the economic cliff leading into an unknown abyss.

The ‘business as usual’, ‘pay for it later’, ‘spending other people’s money’, ‘mortgaging our children’s children’s future’ DOES NOT WORK. The future is NOW. Will we accept the failures within our nation and begin to address and fix the necessary structural changes? Perhaps we may want to start by having both parties aggressively embrace the virtues of truth, transparency, and integrity.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.


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