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Obama Wants to Scrap $72-Billion Business Tax Break as Republicans BalkFri, 25 Jan, 2013 | Posted By: The Times Of Earth (TOE)

Obama Wants to Scrap $72-Billion Business Tax Break as Republicans Balk Barack Obama’s proposal to end a business tax break worth $72 billion is among the tensions the president may confront as he meets today with Senate Minority Leader Mitch McConnell in an effort to revive bipartisan talks over reducing the debt, three

Barack Obama’s proposal to end a business tax break worth $72 billion is among the tensions the president may confront as he meets today with Senate Minority Leader Mitch McConnell in an effort to revive bipartisan talks over reducing the debt.

Ending the so-called last-in-first-out, or LIFO, provision, a method of accounting for inventory costs, was among options offered by White House officials for raising $400 billion in revenue over 10 years during seven weeks of negotiations led by Vice President Joe Biden, three persons familiar with the issue said on the condition of anonymity because they weren’t authorized to comment publicly.

Barack Obama’s proposal to end a business tax break worth $72 billion is among the tensions the president may confront as he meets today with Senate Minority Leader Mitch McConnell in an effort to revive bipartisan talks over reducing the debt, three persons familiar with the issue say. Photographer: Brendan Hoffman/Bloomberg

June 27 (Bloomberg) -- John Taylor, an economics professor at Stanford University, talks about Federal Reserve monetary policy, the Taylor Rule and prospects for U.S. economic recovery. Taylor speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

June 24 (Bloomberg) -- U.S. Representative Kevin McCarthy, a California Republican, talks with Bloomberg's Al Hunt about negotiations between lawmakers to raise the U.S. debt ceiling. Bloomberg's Hans Nichols and Heidi Przybyla report on deficit talks and President Obama's decision to withdraw 33,000 U.S. troops from Afghanistan. Greg Stohr talks about the U.S. Supreme Court's ruling that Wal-Mart Stores Inc. can't be sued for discrimination. Commentators Kate O'Beirne and Margaret Carlson discuss potential 2012 Republican presidential candidates. (Source: Bloomberg)

June 27 (Bloomberg) -- Barry Anderson, a former deputy director of the Congressional Budget Office, previews President Barack Obama's White House meetings today with Senate leaders Democrat Harry Reid and Republican Mitch McConnell in an effort to revive deficit-reduction talks. Anderson speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

June 27 (Bloomberg) -- David Blanchflower, a professor at Dartmouth College and Bloomberg Television contributing editor, talks about U.S. Treasury Secretary Timothy Geithner's remarks on the economy during an appearance at Dartmouth on June 24. Blanchflower speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

June 27 (Bloomberg) -- Al Hunt, executive editor at Bloomberg News, talks about U.S. Representative Michele Bachmann of Minnesota entering the 2012 Republican presidential race. Hunt, speaking on Bloomberg Television's "InBusiness With Margaret Brennan," also discusses the outlook for negotiations in Washington on the budget and deficit reduction. (Source: Bloomberg)

June 27 (Bloomberg) -- Andrew Laperriere, head of policy research at ISI Group, talks about congressional budget talks and Republican strategy. Laperriere speaks on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)

Senate Minority Leader Mitch McConnell. Photographer: Jay Mallin/Bloomberg

“We think this is part of simplifying the tax code” and leveling the playing field for companies, White House press secretaryJay Carney said today. He used the example of an oil companythat bought oil when prices lower and sells it when the price is higher, declaring its profit based on the higher price. “We just don’t think that’s right,” he said.

Approximately 12 percent of the companies on the S&P 500 Index have a total of $62 billion in LIFO reserves in 2010, and energy companies account for more than 82 percent of these reserves, according to an analysis by Bloomberg Government. They make up 8 of the top 10 firms with the largest LIFO reserve.

Debt Limit

Republicans want a multitrillion-dollar debt-reduction package as part of a vote to increase the nation’s $14.3 trillion borrowing limit by Aug. 2. The LIFO provision was among possible revenue increases that Republicans opposed when the Biden talks, which included two Republicans and four Democrats, collapsed last week. Biden criticized Republicans for trying to keep President George W. Bush-era tax breaks while advocating cuts in Medicare.

“We’re never going to solve our debt problem if we ask only those who are struggling in this economy to bear the burden and let the most fortunate among us off the hook,” Biden said at the Ohio Democratic Party’s annual dinner at the Greater Columbus Convention Center June 25. “Not only is it unfair to do what they’re calling for, but I think it borders on being immoral.”

An administration official told reporters June 24 that House Majority Leader Eric Cantor and Senator Jon Kyl, the chamber’s No. 2 Republican, walked out because they were unwilling to accept any tax increases.

Oil and Gas Subsidies

Among these were ending subsidies for oil and gas companies and breaks for corporate jets and tax breaks for Americans earning more than $500,000 a year, according to Representative Chris Van Hollen, a Maryland Democrat who participated in the talks.

Obama and Republican leaders now must bridge the divide as pressure builds for a deal. Moody’s Investors Service this month said it will put the U.S. government’s Aaa credit rating under review for a downgrade unless there’s progress on raising the debt limit by mid-July. Pacific Investment Management Co. LLC Chief Executive Officer Mohamed El-Erian said on CNN that a short-term U.S. default on its debt might have “catastrophic” legal consequences.

Administration officials including Treasury Secretary Timothy Geithner have said they are confident a debt-limit deal can be reached by Aug. 2. Still, Democrats and Republicans so far are dug in on their negotiating positions.

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