House Speaker Nancy Pelosi, D-Calif.,
Brendan Smialowski  /  Getty Images file
House Speaker Nancy Pelosi, D-Calif., is not ruling out repealing tax cuts for the wealthy in order to fund middle-class tax cuts.
updated 1/8/2007 11:02:35 AM ET 2007-01-08T16:02:35

Democrats are not ruling out raising taxes for the wealthiest people to help pay for tax cuts for middle-income families, House Speaker Nancy Pelosi said.

She spoke of pursuing an estimated $300 billion that people owe in back taxes, eliminating deficit spending and reducing wasteful federal spending.

"As we review what we get from... collecting our taxes and reducing waste, fraud and abuse, investing in education and in initiatives which will bring money into the Treasury, it may be that (repealing) tax cuts for those making over a certain amount of money, $500,000 a year, might be more important to the American people than ignoring the educational and health needs of America's children," Pelosi, D-Calif., said in an interview aired Sunday.

A budget rule, known as the pay-as-you-go rule, that was approved by the Democratic-run House on Friday requires that tax cuts have corresponding cuts in government spending or tax increases elsewhere to pay for them.

"What we're saying is Democrats propose tax cuts for middle-income families. And we want to have 'pay-go,' no new deficit spending. We're not going to start with repealing tax cuts, but they certainly are not off the table for people making over half a million dollars a year," Pelosi said.

The Senate's top Republican said most GOP senators oppose this budget rule because "it almost guarantees that the majority, if it enacts it, will try to raise taxes."

"The last thing we need to do is to be raising taxes in this country, and 'pay-go' is the first step toward raising taxes," said Senate Minority Leader Mitch McConnell, R-Ky. "I think there will be very few, if any, Republicans who will support raising taxes.

Last week, the president challenged Democrats to join him in balancing the budget within five years and urged them to cut thousands of pet projects from future spending bills.

"If the president's willing to join with us to fight waste, fraud, and abuse, collecting the taxes, closing the loopholes, we can start there," Pelosi said. "What we'd like to do is come to the table as I say, put all our priorities on the table."

Bush's spending decisions also came under fire from the new chairman of the House Appropriations Committee, Rep. David Obey, D-Wis.

"How can you ever expect to get to a balanced budget if you're spending $100 billion a year on Iraq borrowing the money to do it, if you're giving $50 billion a year in tax cuts to people who make over a million bucks a year and paying for that with borrowed money?" Obey said.

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Elsewhere on the legislative agenda, the chairman of the House Oversight and Government Reform Committee is getting ready to investigate suspected government fraud, particularly in federal contracts in Iraq and the Gulf Coast after Hurricane Katrina struck. But Rep. Henry Waxman, D-Calif., is not preparing to hand out subpoenas at first.

"I don't think you issue a subpoena first. You negotiate, and you try to get the information you need," said Rep. Henry Waxman, D-Calif.

Democratic Rep. Charles Rangel of New York, the new chairman of the tax-writing House Ways and Means Committee, is seeking GOP cooperation in making inroads on bloated tax laws.

"We have to look at all of the deductions, all of the credits, and to come up with what we think we can do," he said. "Is it going to be difficult? You bet your life."

Pelosi appeared on CBS' "Face the Nation." Rangel, Waxman and Obey were on "This Week" on ABC while McConnell spoke on "Fox News Sunday."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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