Debt ceiling debate colors Nevada 2012 elections

LAS VEGAS (AP) - The rivals in Nevada's U.S. Senate race both are looking for a deal that would increase the limit on the nation's credit card, but differ strongly on what else must be packaged in a compromise that would avoid an economic collapse.

Republican Sen. Dean Heller said negotiators from both parties must eliminate corporate tax loopholes and warned he would not support a deal that includes tax increases.

His Democratic rival, Rep. Shelley Berkley, has said tax breaks for profit-rich corporations and millionaires have helped grow the deficit.

The opposing stances adopted by Heller and Berkley reflect how the candidates - here and across the nation - hope to portray themselves in an election that could determine which party will control the Senate. Heller has adopted a conservative, anti-tax front. And Berkley wants to be seen as the candidate who will fight for middle and low-income earners daunted by the economy. It's a tried-and-true dichotomy the parties have embraced for years.

Neither candidate has much of a say in the Washington debt talks. Heller is a Republican in a chamber controlled by Democratic Senate Majority Leader Harry Reid of Nevada. Berkley is just another Democratic voice in the Republican-led House.

Nevertheless, their response to the debt limit crisis is already shaping their 2012 Senate campaigns. They are being closely watched by National Democrats and Republicans and both candidates' ultimate vote on the issue will likely be used against them in attack ads.

If Congress does not raise the debt limit by Aug. 2, U.S. Treasury Secretary Timothy Geithner has warned that the U.S. will be forced to choose between defaulting on loans or cutting popular government programs. Republicans want President Barack Obama and Democrats to agree on spending cuts equal to any increase in the debt limit. Democrats say the deal must also include some tax increases.

Heller would not detail what spending cuts he would accept and refused to say whether defense or health care spending needs to be reduced. He said eliminating various tax exemptions would generate revenue and simplify the confusing tax code. Heller, who was recently appointed to the Senate from the House to fill a vacancy, wants Congress to pass a balanced budget amendment to the U.S. Constitution.

"Everything should be on the table when it comes to spending cuts," Heller said. "The only thing off the table are tax increases."

Heller said Congress must lower the nation's corporate tax rate to help the United States compete globally. The nation has one of the highest effective corporate tax rates, according to the World Bank.

"I believe our taxes our high," he said. "It's a burden to businesses and it makes America less competitive and that's what that tax stands for."

Berkley, meanwhile, has been busy chiding Heller and other Republicans for holding up the debt ceiling vote in hopes of appeasing anti-spending conservatives. But she voted against a measure to lift that legal cap in May, reflecting Democrats' unhappiness with a vote some considered more political than productive. In all, 97 Democrats voted for it, but 82 voted against it. Berkley declined an interview request.

"Defaulting on our nation's financial obligations would not only jeopardize America's reputation overseas, but the Social Security checks and veterans' benefits that Nevadans rely upon," she said in a statement. "We must get serious about tackling our nation's debt and these negotiations are an important opportunity for lawmakers to show what their priorities are. Washington Republicans are attempting to balance the budget by ending Medicare while protecting billions in taxpayer giveaways to millionaires and billionaires, big oil companies making record profits and corporations that ship American jobs overseas."

Berkley has supported lowering taxes before. She voted in April for a failed proposal to make permanent the 2001 and 2003 tax cuts for individuals with income below $200,000 and couples below $250,000. Heller voted against it. Berkley also voted for the American Recovery and Reinvestment Tax Act of 2009, the federal stimulus plan provided tax relief to families, first-time homebuyers, unemployed workers and some businesses. Heller voted against it.

Likewise, Heller hasn't always been anti-tax. As a state Assemblyman in the early 1990s, he voted various times to raise states taxes, including an inheritance tax, property tax, real estate transfer tax, school support tax and sales tax. At one point, however, Heller also voted against two of the three major taxes approved by the Legislature.

During the contentious 2006 Republican primary that ultimately saw Heller elected to Congress, he defended his record.

"There is nobody in the race who didn't raise taxes," Heller said at the time, according to the Las Vegas Review-Journal. "One of the responsibilities the state has is educating youth. If you had a reason to raise taxes, then that was it."

Heller said the economy, not his policy views, has changed, demanding a more fiscally prudent position.

"I don't think you can compare one era decades ago to today's economic climate," he said. "You have to take a look at where we are in society and I just don't think there is any way you can compare 1990 to 2011."

Heller's position mirrors that of national Republicans in Congress, most of whom have signed a no-new-taxes pledge pushed by the conservative group, Americans For Tax Reform. Heller will meet with the founder of the group, Grover Norquist, during a conservative conference Saturday in Las Vegas.

Nevada's other Republican in Congress is following Heller's example. Rep. Joe Heck of Henderson said he wants negotiators to agree on short term and long term spending cuts before he will consider raising the borrowing limit. Heck is running for re-election in 2012, but the boundaries of his district are unknown, and he has yet to draw a challenger.

"Every agency is going to have to share in the pain, including the Department of Defense," he said. "It's very simple. Before we consider raising the debt limit we need to get government spending under control."

Heck signed the Americans for Tax Reform pledge before he was elected.

"They said 'Look, Joe, it is not that we don't trust you, but we have been burned so many times by politicians in the past who said one thing and did another,' " Heck said.