Republicans differ on flexibility on taxes with Obama

WASHINGTON (Reuters) - Senior congressional Republicans said on Sunday they see a chance for a broad deal with President Barack Obama on deficit reduction and reining in spending on vast government programs like Medicare and one senator signaled potential flexibility on taxes.

Obama, who met with lawmakers of both parties last week, has been calling for more tax increases on the wealthiest taxpayers, coupled with new spending cuts, to help curb budget deficits that have exceeded $1 trillion in each of the past four years.

House of Representatives Speaker John Boehner, the top Republican in Congress, and Obama failed to come to terms at the end of last year on an agreement to get America's fiscal house in order.

Such a deal could include spending cuts, tax reform and curbing spending on costly entitlement programs like the Social Security retirement program and the Medicare health insurance program for the elderly and disabled.

Speaking on the "Fox News Sunday" program, Senator Bob Corker, a Tennessee Republican, said: "There, by the way, is a chance on a deal. I know the president is saying the right things. And we have an opportunity over the next four to five months."

Asked on the ABC program "This Week" if prospects for a "grand bargain" were dead, Boehner said, "I don't know whether we can come to a big agreement. If we do, it'll be between the two parties on Capitol Hill. Hopefully, we can go to conference on these budgets - and hope springs eternal in my mind."

Boehner said that while the United States does not have "an immediate debt crisis" one is looming because entitlement programs are not sustainable in their current form. "They're going to go bankrupt," he said.

Asked how long the country had to solve these problems, Boehner said, "Nobody knows where this is. It could be a year or two years, three years, four years."

Obama has engaged in a couple of weeks of outreach to lawmakers - some have called it a "charm offensive" - but the prospects of a large deficit reduction deal by midyear remained unclear.

Corker underscored the importance of reform in the huge entitlement programs like Medicare.

'GOOD ENTITLEMENT REFORM'

"I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue. And that doesn't mean increasing rates. That means closing loopholes. It also means arranging our tax system so that we have economic growth."

Boehner said he has "a very good relationship" with Obama, they are "trying to bridge some big differences" and that he "absolutely" trusts the president.

But Boehner said that if Obama "believes that we have to have more taxes from the American people, we're not going to get very far."

"If the president doesn't believe that the goal ought to be to balance the budget over the next 10 years ... (I'm) not sure we're going to get very far," he said.

Obama met last Wednesday with House Republicans and made little headway in persuading them to accept his demand for tax hikes as part of any deficit-reduction deal.

Republicans and Democrats in Congress last Tuesday offered up vastly different plans to slash long-term deficits.

On Thursday, a Senate bill to avert a federal government shutdown stalled under the weight of more than 100 proposed amendments as senators sought to attach pet provisions.

Senate Democratic leaders postponed further votes on the government spending legislation until Monday and said they would work over the weekend to try to whittle down the number of amendments. They had hoped to pass the measure on Thursday.

Democrat Dick Durbin of Illinois, the No. 2 Senate Democrat, said senators must pass the budget resolution "and then we're going to move to the next stage - and that is the grand bargain stage. That's what the president has tried to set up."

The added provisions in the Senate budget measure threatened to make the bill unacceptable to the Republican-controlled House, which last week passed a much less complicated version of the extension to government funding through September 30. Government agencies and programs face a broad shutdown if Congress fails to pass an extension by March 27.

(Reporting by Will Dunham and Philip Barbara; Editing by Bill Trott)

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Sequester at Home: Uncertainty in DC Suburb Means Higher Taxes to Come

Residents of Virginia's most populous county should expect to see a bump in their property tax bill this year, thanks to economic uncertainty fostered by - you guessed it - Washington and the sequester, a county official said Thursday.

Fairfax County, a D.C. suburb ranked one of the top three richest counties in the country, depends on government contracts for much of its commercial revenue. As agencies are tightening their belts in some places and throwing their hands up on others trying to figure out how the $85 billion budget cuts will affect them, businesses lack the stability to expand, according to Braddock District Supervisor John Cook of Fairfax County.

County officials have named sequestration one of the factors shaping their plans for the coming year.

"The uncertainty about sequestration puts Fairfax in a particularly vulnerable economic situation," reads the county's most recent budget proposal for FY 2014. "The good news is that Fairfax County's General Fund only receives about 1 percent of its budget from the federal government and the County's total revenue stream is fairly resilient. The bad news is that residents and businesses within the County will also be impacted which in turn will impact growth and substantial recovery in the real estate market, consumer consumption and business expansion."

READ MORE: New Hampshire Businesses Look to Exports to Make Up for Budget Cuts

Cook, a Republican coming up on the four-year anniversary of his swearing-in in Fairfax, blamed the need for the tax increase on the federal government's lack of consensus on sequestration and the practice of passing continuing resolutions rather than yearlong budgets.

"The worst thing for a business is to not know what's coming, because a business will adjust to reality," Cook told ABC News Thursday. "If they knew what was coming - even if it wasn't good - they'd adjust to it and eventually we'd have growth, but we won't have growth until there's an answer."

READ MORE: Sequester to Bring Harm Beyond Staffing Cuts at Local, National Level

Yesterday the House of Representatives passed a continuing resolution to fund the government for the next six months. Cook insisted short-term stop-gap measures like these make planning his county's own budget more difficult.

"We have to set aside reserves, and we have to hold off on doing new things, because we don't know what's coming down the pipes," Cook said.

The current budget proposal institutes an extra 2 percent in property tax - going from $1.075 for every $100 of assessed property value to $1.095. The county estimates that will mean an extra $94 added to the average taxpayer's bill.

Fairfax County had the 37 th highest property taxes in the nation between 2005 and 2009, according to the Tax Foundation, with the median home paying about $4,371 in taxes on land. Two other Virginia counties outranked Fairfax, with most of the other counties located in New York, New Jersey or Illinois.

As a state, Virginia ranks 14 th in the nation for highest property taxes; the average locality took $1,427 per capita in property taxes in 2009. Americans paid almost $475 billion in property taxes between September 2011 and September 2012.

READ MORE: The Most Convoluted Sequestration Controversy Known to Man?

The bottom line for Cook was that loss of revenue does not just hurt residents in their wallet. As the board of supervisors finalizes the next draft of the budget between now and April, they're considering flattening education funding.

The county executive recommended raising funding to schools by two percent - a three percent cut from what they requested. But Cook said that number could drop to zero.

The Center on Budget and Policy Priorities estimates local education agencies in Virginia are already losing more than $11.6 million dollars in grants, plus another $14.395 million in special education grants to the state, almost half a million in pre-school grants and $999,000 in federal work study.

READ MORE: Sequester Snapshot - Student Loans

"What's the real world effect of this uncertainty in the economic environment? It's that our schools are not getting the money that they're looking for," Cook said.

Virginia Gov. Bob McDonnell signed an executive order March 1 with $45 million targeted to help localities.

"We are doing all we can on the state level to weather this difficult period," the Republican governor said in a statement emailed to ABC News. "Now, we need leadership in Washington so all states and all Americans can have certainty about the years ahead, and to get our nation's fiscal house in order."

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