Reid Rules out Spending Cuts if More Revenue is Not Raised through Taxes

Senate Majority Leader, Harry Reid (D-Nevada), reiterated on Sunday that a any new budget deal,  aimed at averting  series of draconian spending cuts or sequestration which is scheduled to come into effect from March 1— would have to include additional revenue through taxes.

Sequestration was originally scheduled to come in to effect at the beginning of the New Year but was postponed until March 1 thanks to a last-minute ‘fiscal cliff’ deal among congressional leaders.

At that moment, the U.S. congress passed a bipartisan bill approving raising taxes on wealthy individuals, postponing other unresolved issues ( federal government’s spending cuts) by about three months.

In an interview to ABC’s ‘This Week’, Reid said, “The American people are on our side. The American people don’t believe in these austere things. We believe that the rich should contribute. We believe we should fill those tax loopholes, get rid of them, I should say. And that’s where we need to go.”

It is estimated by Macroeconomic Advisers, a forecasting firm in St Louis that sequester will knock down 0.7 percentage points from the economic growth, slowing down the annual GDP growth rate to 1.9 percent in 2013.

However, political brinkmanship in Washington is keeping Americans, investors and business leaders on toes.

While the GOP insists that it has already offered enough concessions to Democrats by agreeing on raising additional revenue through taxes, Democrats maintain that any new deal should focus on spending cuts and generating extra revenue through taxes.

Just last week, Republican and House Budget Committee Chairman, Paul Ryan, warned that “sequester is going to happen”, adding that the White House was not compromising on the issue of raising revenue through spending cuts.

However, Reid on Sunday added that doors were not completely shut and there was still a scope for reconciliation. Reid also supported 2012 GOP presidential nominee Mitt Romney for his suggestions on sealing tax loopholes and abolishing deductions in order to augment revenue.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.