By ANDREW TAYLOR, Associated Press
WASHINGTON (AP) — Members of a special deficit-cutting panel are getting renewed encouragement from their colleagues even as they remain far apart on taxes and cuts to so-called entitlement programs like Medicare.
And some are taking a glass-half-full view of a Republican offer this week in which even GOP hardliners on taxes showed new flexibility on tax revenue increases.
"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."
Alexander said the so-called supercommittee could expect help from a bloc of 45 senators that have signed on to a letter pledging support for a deficit bargain that mixes new revenues with curbs on the growth of government benefits programs.
Republicans on Monday offered a combination of new revenues and spending cuts that would cut the deficit by about $1.5 trillion over the coming decade. Even as they refused to acknowledge the specifics of the GOP offer, Democrats were quick to dismiss it.
"I have yet to see a real, credible plan that raises revenue in a significant way to bring us to a fair, balanced proposal," said Sen. Patty Murray, D-Wash., the co-chair of the 12-member supercommittee. The GOP offer, however, puts the onus on Democrats to come up with a counter-proposal.
No. 2 Senate Democratic leader Richard Durbin, D-Ill., 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."
Asked why he considered it to be a breakthrough, he told reporters, "The word revenue. It is a breakthrough."
Durbin said bipartisan group of about 45 senators - an outgrowth of the chamber's Gang of Six - planned to release a statement later Wednesday urging the supercommittee to keep working toward a target in the $4 trillion range, well above its mandated savings target of $1.2 trillion to $1.5 trillion.
Private meetings continued on Wednesday, with panel Republicans meeting among themselves in the morning, while Democrats were slated to meet in the afternoon.
The GOP plan would place sharp limits on popular tax breaks like the mortgage interest deduction in exchange for significantly lower income tax rates. At the same time, Republicans are willing to accept a net increase in individual income tax revenues of about $300 billion over the coming decade.
Democrats say the GOP proposal would cut the top rate so sharply - from 35 percent to 28 percent - that wealthier earners would get large tax cuts while middle class workers would have to lose out on deductions for mortgage interest and state and local taxes.
Aides in both parties requested anonymity to describe the GOP proposal, and they differed on some of the details.
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 to 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.
Republicans also support gradually raising the Medicare eligibility age to 67 for future retirees, but GOP and Democratic aides offered different accounts of whether the idea was officially part of the proposal. Democrats said it was in the plan; Republicans say it was part of the discussion but not an official GOP position.
The supercommittee has been super-secret in its deliberations and the aides insisted on anonymity because they were not authorized to speak publicly about the negotiations. The deficit panel has until the day before Thanksgiving to report its proposal, a deadline just two weeks away.
The GOP offer, discussed by a bipartisan subgroup of supercommittee lawmakers Monday evening, contrasts with a Democratic plan introduced last month that proposed revenue increases of about $1.3 trillion that would also be netted after a rewrite of the loophole-cluttered federal tax code. Both proposals are similar in concept to ideas discussed last summer in negotiations between House Speaker John Boehner, R-Ohio, and President Barack Obama.
But the Boehner-Obama talks fell apart over taxes and benefit cuts, and the final legislation included cuts to the day-to-day operating budgets of Cabinet agencies totaling $900 billion over a decade - and establishment of the deficit panel with unusual powers to develop a plan for further cuts. The panel is charged with coming up with $1.2 trillion in deficit cuts over a decade; failure to accomplish the goal would trigger automatic spending cuts across a wide range of federal programs.
The plan proposed Monday was more modest, congressional aides said, raising about $250 billion from individual tax reform and $40 billion from using a new inflation adjustment when updating the income levels for tax brackets. An overhaul of the corporate tax code could raise an additional $60 billion, the aides said.
Aides to supercommittee Democrats attacked the proposal, saying the GOP plan for a top individual tax rate of 28 percent would give wealthier earners large tax cuts while sharply cutting back tax breaks important to middle class workers. And they said the proposed tax increases were too small when measured against the nation's huge debt.
"We've made a little bit of progress but it's not enough, in our judgment," said Sen. John Kerry, D-Mass., a member of the deficit panel. "We have some distance to go."
(Copyright 2011 by The Associated Press. All Rights Reserved.)