CQ TODAY ONLINE NEWS
Oct. 28, 2011 – 10:10 p.m.
Leaders Focus on Finding Broad Deal
By Paul M. Krawzak and Joseph J. Schatz, CQ Staff
With little more than three weeks until its deadline, the deficit reduction committee has turned its focus to trying to agree on the broad principles of a deal that might pass both chambers.
A parallel process is also under way among leaders of both chambers.
House Speaker
The attempt to agree on a broad framework is driven by the fact that, after 15 closed-door meetings of the full Joint Select Committee on Deficit Reduction, numerous other get-togethers and discussions and three public hearings, Republicans and Democrats on the panel remain far apart on the sticking point of taxes.
Democrats insist that any cuts in entitlement spending be accompanied by an increase in tax receipts. Republicans have repeatedly opposed any increase in taxes, except for whatever might be attributed to faster economic growth.
If House and Senate leaders can resolve the revenue dispute and agree to the outlines of a deal — and assuming that a majority of the joint committee goes along — the panel would be able to complete its task by plugging legislative details into the framework.
On her way out of a joint committee meeting on Oct. 27, Murray expressed optimism that the two sides will be able to bridge the divide over revenue, although she stressed the need for compromise.
“We started out with six Democrats, six Republicans,” she said. “There’s no doubt at the end of the day people have to give.”
Engaging the Leadership
The intervention of congressional leaders was brought about in part by the inability of the panel, which has been meeting since early September, to make much progress toward resolving the tax question.
“They have defined the gulf but not narrowed it,” said an aide to one of the joint committee members.
Still, it was always seen as inevitable that House and Senate leaders would step in at some point, because no plan produced by the committee has a chance of passage without their blessing.
Talks among the leaders have been shrouded in even greater secrecy than the deliberations of the joint committee itself, which have been unusually private and leak-proof. An aide to one leader said there is reluctance to say anything about the discussions for fear of interfering with whatever bipartisan progress is being made.
Leaders Focus on Finding Broad Deal
House Minority Leader
Pelosi evinced little concern when asked Oct. 27 whether she thought it was “unfair” that she had been excluded from the deliberations that began at least two weeks ago.
“I don’t believe that I have been cut out of supercommittee discussions,” she said. Pelosi said the three Democratic lawmakers she appointed to the panel have her “trust and confidence.” And, she said, “if there are any other meetings that are going on, I hope that they will be in furtherance of people reaching agreements on where they may have some differences.”
Differences and Similarities
The challenge that lies ahead as the joint committee aims for a Nov. 23 deadline to find at least $1.2 trillion in deficit reduction over the next 10 years was made clear last week. The opening bids by panel Democrats and Republicans did not gain traction with members of the other side when presented on Oct. 25 and Oct. 26.
Although both plans seek to “go big” by aiming for a larger amount of deficit reduction than required by the Budget Control Act (PL 112-25), they differ markedly in their approach to revenue.
The $3 trillion Democratic plan includes more than $1 trillion in tax increases, while the GOP’s $2.2 trillion proposal avoids direct tax increases in favor of other revenue-raising measures.
Each side greeted the other’s proposal with some level of disbelief.
At the same time that the tax issue pre-sents a significant gap between the two parties’ approaches, there are also areas of overlap that might form the basis for an agreement.
A GOP leadership aide, for instance, said it was “significant” that the Democrats’ proposal included entitlement cuts.
Both sides would tap farm subsidies and other mandatory programs identified during earlier budget negotiations as areas that might offer room for cuts. And both would produce some of their savings from a shift to a different measurement for cost-of- living adjustments. The new measurement, known as the chained consumer price index, would have the effect of limiting annual increases in Social Security benefits and also would push more people into higher tax brackets, increasing tax receipts somewhat.
Resolving the split over boosting revenue may be the key to whether Democrats will agree in the end to significant entitlement cuts, including the ones they have already proposed.
In their plan, the Democrats would generate new revenue in a two-step process, beginning with a down payment of several hundred billion dollars. The balance would be achieved through a tax-code overhaul. Democrats also have discussed including a trigger that would raise revenue through higher taxes on upper-income earners if a tax overhaul did not materialize. Boehner opposes that idea.
Leaders Focus on Finding Broad Deal
Republicans counted $640 billion in new revenue in their plan, of which $200 billion would come from an overhaul of the tax code. That is a small amount in the eyes of Democrats, who believe that they have ceded significant ground on spending cuts to the GOP. But even that sum might raise the hackles of conservatives bent on a revenue- neutral tax overhaul.
And much may hinge on how the Joint Committee on Taxation defines the revenue effects of an overhaul. Republicans say their revenue increases might be scored as resulting from economic growth, which would presumably be easier to sell to some conservative lawmakers.
As details of the plans have become public, outside groups have begun to object to elements of the plans and to bring pressure to bear on the lawmakers they generally count on their side.
AFL-CIO President Richard Trumka released a statement on Oct. 28 vowing to oppose any cuts in Social Security or Medicare benefits or in the federal contribution to Medicaid. Trumka upbraided Democrats on the joint committee, saying they “have put all their concessions on the table up front in the vain hope that the Republicans might reciprocate.”
In a similar vein, the left-leaning Center on Budget and Policy Priorities characterized the Democratic plan as a “dramatic departure” from the party’s previous budget-negotiating positions, because it assumes larger entitlement spending cuts and smaller revenue increases than some other plans.
The group also said rejection of the Democrats’ proposal by Republicans “likely dooms chances that Congress will be able to pass a big bipartisan plan.”
Richard E. Cohen contributed to this story.