Democrats and Republicans exchanged competing deficit reduction plans Wednesday with the biggest partisan split less over spending per se and more the willingness to find some solution to the impasse over tax revenues.
Each party assumes hundreds of billions of dollars in savings from federal health-care programs for the elderly and poor, as well as additional cuts from appropriations, already hit under the August budget accord. But Republicans continue to balk at any major commitment to new taxes, and the result is the GOP?s $2.2 trillion package is about a third less than the Democrats? offer, which assumes $1.3 trillion in new tax revenues over the next 10 years.
Continue ReadingThe back-and-forth played out behind closed doors at the House-Senate supercommittee, which is charged with coming up with a plan that will achieve at least $1.2 trillion in deficit reduction over the coming decade.
With the Nov. 23 deadline less than a month away, both parties are under pressure to shoot higher but equally fearful of outright failure, forcing across-the-board cuts and what could be a political debacle for a Congress already held is such low regard.
As if sensing this, Democrats appear willing to put more on the table ? including landmark changes impacting Medicare and Social Security ? to try to force the GOP?s hand on taxes. Yet having begun the year boldly with ambitious deficit reduction plans, Republicans can appear paralyzed by their anti-tax political pledges ? even at the risk of losing a major deficit reduction package.
Given the secrecy surrounding the committee?s deliberations ? staff was asked to leave during some of Wednesday?s presentations ?the full details of each plan are not certain. But from interviews with both sides, here is a partial picture:
Democrats outlined a package in the range of $3 trillion, including about $575 billion from health-related programs like Medicare and Medicaid and $400 billion more in cuts from appropriations. An additional $250 billion would come out of other federal benefits such as farm subsidies or the retirement system for federal workers. Though it is still a contentious issue inside the party, the leadership has also signaled it might include adjustments in the Consumer Price Index, impacting Social Security payments, as well as annual adjustments in the tax code. But all this would be contingent on also getting the added $1.3 trillion in tax revenues.
The Republican plan shares much of the same ground but allows for only $640 billion in revenues, and when this is broken down, very little comes directly from the sort of tax increases Democrats have been demanding.
?Their offer is a joke,? said one Democratic aide. ?Democrats came to the table with an offer that had serious skin in the game for both parties. Rather than offering real solutions, Republicans are just doing more of the same posturing they do every time they walk away from efforts to constructively tackle this crisis.?
Indeed, about $440 billion appears to be generated instead by increased government fees, high patient co-pays under Medicare, for example, or increased Part B premiums charged to higher income beneficiaries ? many changes that Democrats also accept but feel do not address the larger tax issue.
On the tax side, changes in the CPI would again yield some revenue, but the greater share of the tax revenue here ? about $200 billion ? is attributed to the impact of future tax reform spurring economic growth.
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