Deficit ‘supercommittee' hits rough patch

ANDREW TAYLOR

Asso­ci­ated Press

WASHINGTON — Even as a recent good-faith swap of offers showed a nar­row­ing of dif­fer­ences over taxes, a spe­cial deficit-cutting “super­com­mit­tee” seems to have hit a major snag just two weeks before its deadline.

The two sides can’t even agree on who should make the next move after an exchange of plans Mon­day night in which Democ­rats scaled back their demands on taxes even as Repub­li­cans for the first time offered higher tax rev­enues as part of a plan to cut deficits by $1.5 tril­lion over the com­ing decade.

Democ­rats’ most recent plan calls for $2.3 tril­lion in deficit cuts, includ­ing $1 tril­lion in new rev­enue skimmed off the top as Con­gress over­hauls the tax code. Repub­li­cans coun­tered with an offer — pil­lo­ried by Democ­rats as a give­away to the wealthy — for almost $300 bil­lion in tax boosts over the same timeframe.

The glass-half-full inter­pre­ta­tion of the GOP pro­posal was that it was a sig­nif­i­cant advance because even tea party favorites like Sen. Pat Toomey, R-Pa., the chief author of the plan, endorsed higher tax revenues.

The No. 2 Sen­ate Demo­c­ra­tic leader, Richard Durbin of Illi­nois, said he con­sid­ered this week’s GOP offer “an hon­est effort” and “a break­through that can lead to an agree­ment. That’s what we need.”

But Democ­rats on the super­com­mit­tee, as well as staff oper­a­tives work­ing behind the scenes, mounted a spir­ited attack on the GOP plan, which was largely depicted in the media as a big shift for Republicans.

Democ­rats said the lat­est GOP idea is unfairly skewed in favor of the wealthy because it would require new lim­its on tax breaks that mostly ben­e­fit middle-income tax­pay­ers, such as the child tax credit, per­sonal exemp­tion and deduc­tion for home mort­gage inter­est, while low­er­ing the top rate for top earn­ers from 35 per­cent to 28 percent.

The Toomey plan would lower other tax brack­ets pro­por­tion­ately, reduc­ing the 28 per­cent bracket to 23 per­cent and the 25 per­cent bracket to 20 percent.

An analy­sis by Demo­c­ra­tic tax experts says that to lower rates so dra­mat­i­cally would “require elim­i­nat­ing vir­tu­ally all deduc­tions for the mid­dle class.”

The doc­u­ment angered some Repub­li­cans, espe­cially after they traced it back to staff aides to Finance Com­mit­tee Chair­man Max Bau­cus, D-Mont., who they had pre­vi­ously viewed as one of the panel mem­bers they were work­ing most coop­er­a­tively with.

Repub­li­cans said the Demo­c­ra­tic paper didn’t accu­rately reflect Toomey’s pro­posal, which would claim $250 bil­lion in higher tax rev­enues by crack­ing down on deduc­tions claimed by peo­ple in the upper two tax brackets.

The most recent Demo­c­ra­tic offer scaled back an ear­lier Demo­c­ra­tic demand for $1.3 tril­lion in higher taxes, a con­ces­sion to Repub­li­cans. At the same time it jet­ti­soned a plan to slow the growth in future cost-of-living increases in Social Secu­rity ben­e­fits, a pro­vi­sion that lib­eral Democ­rats oppose.

The one-page pro­posal was handed to Repub­li­cans at a meet­ing Mon­day night attended by some but not all mem­bers of the super­com­mit­tee. At the same ses­sion, GOP law­mak­ers in atten­dance advanced a revised pro­posal of their own that sig­naled for the first time they would be will­ing to accept higher rev­enues as part of a plan to cut deficits over the next decade.

Given the unusual secrecy of the meet­ing and the committee’s Nov. 23 dead­line to pro­duce at least $1.2 tril­lion in sav­ings, it appeared that the pace of activ­ity on the panel was accel­er­at­ing. Less clear was whether there was still time to bridge enor­mous dif­fer­ences on pri­or­i­ties, or whether each side was lay­ing the ground­work for try­ing to blame the other in case grid­lock triumphs.

The com­mit­tee, com­prised of six Repub­li­cans and six Democ­rats, has been work­ing for weeks. Evi­dence of progress has been scarce, with Repub­li­cans demand­ing large cuts in ben­e­fit pro­grams such as Social Secu­rity and Medicare, while Democ­rats pressed for addi­tional tax rev­enue as a con­di­tion for agree­ing to make deep spend­ing cuts.

As hard feel­ings inten­si­fied among panel mem­bers, other law­mak­ers said both sides had shown flex­i­bil­ity on the issues that long have been at the root of Con­gress’ inabil­ity to com­pro­mise on sweep­ing plans to cut deficits.

“Repub­li­cans have put rev­enues on the table. Democ­rats have put enti­tle­ments on the table,” said Sen. Lamar Alexan­der, R-Tenn. “They both need to put more of each on the table.”

A spokesman for House Speaker John Boehner, R-Ohio, dis­missed what Democ­rats had pre­sented ear­lier in the week. “Right now, we are wait­ing for a response to what the second-ranking Demo­c­ra­tic leader in the Sen­ate called ‘a break­through’ — and we’ve seen noth­ing,” said Michael Steel.

The revised Demo­c­ra­tic plan totaled $2.3 tril­lion in sav­ings over the next decade, includ­ing pro­jected sav­ings in inter­est costs the gov­ern­ment would real­ize from lower deficits, higher than the GOP $1.5 tril­lion blueprint.

Democ­rats’ pro­posed spend­ing on Medicare would be restrained by $350 bil­lion over a decade, and on Med­ic­aid, by $50 billion.

Another $200 bil­lion would come from defense, and an iden­ti­cal amount from a broad swath of gov­ern­ment pro­grams rang­ing from the parks to transportation.

Democ­rats also called for an over­haul of the tax code that would result in an indi­vid­ual rate of no higher than 35 per­cent and a scal­ing back of item­ized deductions.

Broadly speak­ing, how­ever, the GOP plan would raise new rev­enues of at least $500 bil­lion, both skimmed off the top as Con­gress com­pletes an over­haul of the tax code and from pro­pos­als such as auc­tion­ing broad­cast spec­trum, rais­ing Medicare pre­mi­ums and increas­ing avi­a­tion secu­rity fees.

The plan also would cut spend­ing by about $700 bil­lion, mix­ing a less gen­er­ous cost-of-living adjust­ment for Social Secu­rity ben­e­fi­cia­ries with fur­ther cuts to agency oper­at­ing bud­gets and curbs on the boom­ing growth of Medicare and the Med­ic­aid health care pro­gram for the poor and disabled.

Lower inter­est pay­ments on the national debt would pro­vide the remain­ing savings.

Posted by AP News on Nov 10 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.