02-19-2017  3:55 am      •     

WASHINGTON (CNNMoney) -- Tax loopholes should be closed, and the savings should pay down deficits, not lower taxes for the wealthy, according to Charles Schumer, the No. 3 Senate Democrat.

"It is an alluring prospect to cut taxes on the wealthiest people and somehow still reduce the deficit, but you can't have your cake and eat it, too," Schumer said Tuesday, in a speech at the National Press Club.

Schumer dismissed the tax policy model put forth by the Bowles-Simpson plan, a bipartisan proposal that was commissioned and then ignored by President Obama. In that model, lawmakers would eliminate tax loopholes so that more people and companies pay taxes.

The plan also proposed reducing the tax rate for top earners to between 23% and 29%. Today the top rate is 35%, and it's slated to rise next year to 39.6%.

Schumer called that model a "trap of tax reform," especially for the middle class.

There's not enough money to lower tax rates for the upper income and also reduce deficits, Schumer said. He warned that middle-class families, many of whom enjoy tax breaks like an itemized deduction for mortgage interest rates, may feel the biggest squeeze.

"To raise enough money to both reduce tax rates and cut the deficit, you would need to slash deductions and credits on a far greater scale than we ever did in 1986 -- middle-income earners would not be spared," Schumer said.

The Senator said the middle class needs to be protected. He pointed out the growing income inequality over the last few decades as a reason why the wealthy should pay more.

Schumer's stand might be at odds with other members of Congress who are trying to reach a consensus on overhauling the tax code, using principles of the Bowles-Simpson plan.

A group of eight senators from both political parties, dubbed the "gang of 8," is meeting Tuesday in Mount Vernon, Va., to talk about spending cuts and tax changes to avoid the fiscal cliff at the end of the year, according to CNN. Many of those lawmakers have been meeting for more than two years and have so far failed to reach a grand bargain to reduce the debt.

Congress isn't expected to begin serious talks on tax reforms until after the Nov. 6 elections.

Lawmakers are under pressure to make changes to the U.S. tax code. That's because massive tax hikes and across-the-board cuts to federal agencies will kick in the first week of January if Congress doesn't act to prevent the country from going over the fiscal cliff.

Schumer said he believes lawmakers will reach an agreement before the end of the year.

"People want to come to a deal," Schumer said.

Schumer stopped short of offering any ideas but said Democrats must get serious about tackling reforms to entitlement programs like Medicare.

The Bowles-Simpson plan, which Schumer dismissed, is largely embraced by the business community. Erskine Bowles was a White House chief of staff under President Bill Clinton, while Alan Simpson is a former Republican senator. They co-chaired the President's debt reduction commission in 2010.

-- CNN's Ted Barrett and Dana Bash contributed to this report.

 

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All of this has played out amid a steady drip of revelations about an FBI investigation into his campaign's contacts with Russian intelligence officials. Trump says his administration is running like a "fine-tuned machine." He points to the rising stock market and the devotion of his still-loyal supporters as evidence that all is well, although his job approval rating is much lower than that for prior presidents in their first weeks in office. Stung by the unrelenting criticism coming his way, Trump dismisses much of it as "fake news" delivered by "the enemy of the people" — aka the press. Daily denunciations of the media are just one of the new White House fixtures Americans are adjusting to. Most days start (and end) with presidential tweets riffing off of whatever's on TV talk shows or teasing coming events or hurling insults at the media. At some point in the day, count on Trump to cast back to the marvels of his upset of Democrat Hillary Clinton in the November election and quite possibly overstate his margins of support. Expect more denunciations of the "dishonest" press and its "fake news." From there, things can veer in unexpected directions as Trump offers up policy pronouncements or offhand remarks that leave even White House aides struggling to interpret them. The long-standing U.S. policy of seeking a two-state solution to the Israeli-Palestinian conflict? Trump this past week offered this cryptic pronouncement: "I'm looking at two-state and one-state, and I like the one that both parties like. I can live with either one." His U.N. ambassador, Nikki Haley, the next day insisted, "We absolutely support a two-state solution." Trump's days are busy. Outside groups troop in for "listening sessions." Foreign leaders call or come to visit. (Or, in the case of Mexico's president, cancel out in pique over Trump's talk about the planned border wall.) After the president signed two dozen executive actions, the White House was awaiting a rush order of more of the gold-plated Cross pens that Trump prefers to the chrome-plated ones used by his predecessor. Trump hands them out as souvenirs at the signing ceremonies that he points to as evidence of his ambitious pace. "This last month has represented an unprecedented degree of action on behalf of the great citizens of our country," Trump said at a Thursday news conference. "Again, I say it. There has never been a presidency that's done so much in such a short period of time." That's all music to the ears of his followers, who sent him to Washington to upend the established order and play the role of disrupter. 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Trump shouldn't mistake the fact that some of his supporters like his style with the fact that a lot of Republicans just want the policies he promised them. He has to deliver that." Put Senate Majority Leader Mitch McConnell, R-Ky., in the camp of those more interested in substance than style. "I'm not a great fan of daily tweets," McConnell said Friday, referring to the "extra discussion" that Trump likes to engage in. But McConnell was quick to add: "What I am a fan of is what he's been actually doing." He credits Trump with assembling a conservative Cabinet and taking steps to reduce government regulation, and promised: "We like his positions and we're going to pursue them as vigorously as we can." The challenge may be to tease out exactly what Trump wants in the way of a health care plan, tax changes and trade policy. At his long and defiant news conference on Thursday, Trump tried to dispel the impression of a White House in crisis, squarely blaming the press for keeping him from moving forward more decisively on his agenda. Pointing to his chief of staff, Reince Priebus, Trump said, "You take a look at Reince, he's working so hard just putting out fires that are fake fires. I mean, they're fake. They're not true. And isn't that a shame because he'd rather be working on health care, he'd rather be working on tax reform." For all the frustrations of his early days as president, Trump still seems tickled by the trappings of his office. When New Jersey Gov. Chris Christie visited the White House last week to discuss the national opioid epidemic over lunch, the governor said Trump informed him: "Chris, you and I are going to have the meatloaf.'" Trump added: "I'm telling you, the meatloaf is fabulous." ___Follow Nancy Benac on Twitter at http://twitter.com/nbenac
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