CQ TODAY ONLINE NEWS
Updated Nov. 8, 2011 – 5:38 a.m.
Revenue Included in GOP Proposals
By Sam Goldfarb and Paul M. Krawzak, CQ Staff
Several members of the deficit reduction committee are discussing proposals to save $1.2 trillion or more and raise revenue by broadening the tax base while also reducing rates.
Senate Republicans on the panel are advancing one particular plan and have been sharing their ideas with Montana Democrat
Democratic aides strenuously denied that Republicans have put forward any ideas — to Baucus or anyone else — that might come close to overcoming partisan divisions on the panel.
“These purported offers are complete jokes and just a way for the GOP to pretend they are working toward solutions,” one Democratic aide said.
Republican aides said several plans are being examined. In broad terms, all of the proposals under consideration would trade additional revenue — a condition demanded by Democrats — for cuts in entitlement spending that Republicans have been seeking since the start of the year, including for Medicare and Medicaid.
While it could prove difficult — and perhaps impossible — to accomplish, Senate Republicans are also discussing ways to make significant changes to the income tax code right away, rather than leave such work to the traditional tax-writing committees.
Under one proposal, increased revenue would come largely from placing limits on the total value of tax deductions and credits individuals can claim, while eliminating or restructuring tax breaks for corporations. Tax rates for individuals and corporations would also be reduced in an effort to improve economic incentives.
Tax rates, though, would not be lowered so much that the revenue lost would completely offset the base-broadening efforts. As a result, the measure taken as a whole would increase tax collections, according to conventional scorekeeping methods.
Overall, Republicans appear willing to raise as much as $500 billion over 10 years. Some of that money, though, would probably come from non-tax sources, such as fee increases and the sale of public resources.
Still, some Republicans on the panel appear to be open to a net tax increase, even if the amount does not come close to the $1.3 trillion in new levies that Democrats have demanded previously as part of a much bigger deficit reduction package of roughly $3 trillion.
A Democratic aide close to the committee said that while various proposals have been under discussion among members of the panel, Democrats had not received any formal proposal from the GOP that included “any real revenue being put on the table.”
Aiming for an Overhaul
A move to legislate immediate tax code changes, rather than set guidelines for the House Ways and Means and Senate Finance committees regarding a future overhaul, might raise bipartisan concerns outside the joint committee. That is because whatever the panel recommends will be subject to up-or-down votes in the House and Senate and cannot be amended.
Revenue Included in GOP Proposals
On the other hand, deferring possible tax changes might make it difficult, if not impossible, for the two parties to agree to immediate spending cuts.
The debt limit law (PL 112-25) that created the joint committee requires the panel to produce legislation by Nov. 23 that would reduce the deficit by at least $1.2 trillion over a decade. Otherwise, across-the-board spending cuts would go into effect automatically in January 2013.
While Democrats and Republicans have put forward different proposals to cut government spending, their differences over tax policy are widely seen as the major impediment to a deal.
Since the start of negotiations, Democrats have portrayed Republicans as ideologically rigid and opposed to the “balanced” kind of deficit reduction agreement that voters favor.
Republicans say Democrats are playing political games by asking for larger tax increases than they expect to get.
Earlier this year, Speaker
Boehner said he pulled out of those talks in part because Obama changed his demand at the last moment to a tax overhaul that would raise $1.2 trillion.
Since then, some Democrats have indicated they may want to end the Bush-era tax cuts only on income above $1 million, extending the cuts on income below that amount. Adopting that strategy would raise considerably less than $800 billion, compared with an extension of current tax policy.
For months, Republican Sens.
Both have been meeting with panel members Baucus and
Deficit committee member
Joseph J. Schatz contributed to this story.
First posted Nov. 7, 2011 10:55 p.m.