Members of the deficit Super Committee are still meeting, still talking, but for all intents and purposes, negotiations have stalled. The underlying difficulty remains the GOP’s unwillingness to agree to raise significant new tax revenue, enough to match Democrats’ willingness to cut spending on popular programs like Medicare and Social Security. But with days ticking down quickly until the panel’s November 23 deadline, each party is claiming that the ball is in the other’s court.
One of the most recent offers, the details of which were leaked to the press earlier this week, came from Sen. Pat Toomey (R-PA). It’s been characterized by Republicans as a plan that would raise $300 billion in new revenue, Republicans say, by limiting certain tax preferences. But it also would require reducing, and making permanent, Bush-era tax rates for high income earners — a requirement Democrats oppose. Additionally, the overall revenue figure may be the product of a controversial “dynamic” model, which assumes that the tax changes will lead to economic growth.
Democrats have applauded Republicans for finally acknowledging that higher net tax revenues need to be part of the committee’s overall mix. But they’ve also rejected the offer as not serious, and wildly dismissive of Dem demands that the panel reduce deficits nearly as much by rolling back spending on safety net programs as by requiring wealthier Americans to pay higher taxes.
“We have a big gap with respect to where we are on revenue,” Sen. John Kerry (D-MA), a member of the committee, told reporters Wednesday morning. “The Toomey approach will not work. We’ve told them that very directly. We have to find a different way to come at it… They’ve got to put real revenue on the table that helps us get the job done.”
Republicans say the ball is in the Dems’ court.
But both parties acknowledge that Democrats this week put forth another plan that would result in both $1 trillion in spending cuts and $1 trillion in higher tax revenue over the next decade. The offer, according to sources, would exclude a Social Security benefit cut, achieved by pegging cost-of-living adjustments to a less generous measure of inflation, that both parties have recently entertained.
Republicans rejected it out of hand.
“I’m afraid the talks have broken down,” said Sen. Jim DeMint (R-SC), who is not a member of the committee, on Fox News late Wednesday.
The question now is whether Republicans have opened the door to real revenue increases or whether they’ve floated a plan designed to look like a compromise, knowing Democrats would reject it.
They’ll need to figure out what their game plan is very soon, though. The Congressional Budget Office needs to score any potential consensus proposal for its deficit impact before the panel passes it on to Congress. That’s a fairly lengthy process in and of itself — one that leaves the committee at most a few days to submit a final package.
If they fail, they trip a $1.2 trillion enforcement mechanism which will cut hundreds of billions of dollars from defense and entitlement programs over 10 years, starting in 2013. If that happens, expect a full civil war on Capitol Hill.
“We will have until next election to fix this thing,” DeMint said.
