By Alexander Bolton - 09/16/11 10:00 AM EDT
Partisan lines are beginning to harden over whether the Joint Select Committee on Deficit Reduction should embrace tax increases, casting doubt on the panel’s goal of reaching a deal by Thanksgiving.
Sen. Charles Schumer (N.Y.), the third-ranking Democrat in the Senate leadership, said it would be almost impossible for the deficit-reduction supercommittee to agree on a deal if Republicans refuse to raise taxes.
“I think it’s going to be very hard to come up with an agreement without revenues on the table, net revenues,” Schumer told reporters Thursday night, putting emphasis on the words “net revenues.”
Schumer rejected tax reform as a deficit-reduction solution if the committee did not raise net levels of taxation.
He said tax reform that merely eliminated some tax breaks in exchange for lowering tax rates — in a way that produced a revenue-neutral score from the Congressional Budget Office — “doesn’t do anything to solve the deficit.”
“Without revenues on the table, it’s very hard for the supercommittee to come up with things,” he said.
Schumer made his remarks in response to Speaker John Boehner’s (R-Ohio) declaration earlier Thursday that tax increases should not be part of the supercommittee’s final package. Speaking at the Economic Club of Washington, Boehner said the 12 members of the panel should focus on spending cuts and entitlement reform. He said they should leave tax increases out of the equation.
“When it comes to producing savings to reach its $1.5 trillion deficit-reduction target, the joint select committee has only one option: spending cuts and entitlement reform,” Boehner said.
Boehner’s firm statement against tax increases put his opinion squarely in the midst of the supercommittee’s deliberations, and could harden partisan lines within the group.
Senate Majority Leader Harry Reid (D-Nev.) says he wants to give the group as much independence as possible, and scolded Boehner for injecting his views into their talks.
“I’m disappointed that Speaker Boehner would get involved with this supercommittee in a public fashion. I don’t think he should do that. I’m not going to do that,” Reid said.
“I’m confident the supercommittee can come up with something that will stop sequestration. As to what that should be, I have some opinions, but I’m not going to voice them publicly,” Reid added.
If the committee does not agree on a deficit-reduction plan worth at least $1.2 trillion, it would trigger automatic spending cuts up to that amount beginning in 2013. About half the automatic reductions would come from defense and the other half from non-defense programs. That would include a 2 percent cut to Medicare.
At its first public hearing Tuesday, supercommittee members asked Congressional Budget Office Director Douglas Elmendorf about potential savings from tax reform. But questions focused on the extra revenue through spurred economic growth instead of a net increase of tax levels.
Democratic leaders made it clear on Thursday that tax reform failing to raise the net level of taxation would not pass muster. They have voiced misgivings about reform that would raise revenue according to speculative, pro-growth forecasts.
"Any tax reform and closing of loopholes, which is really important for us to do as a sense of fairness, must also reduce the deficit," Pelosi said during a press briefing in the Capitol. "You can't just say we're going to have reforms that would lower the corporate rate — which I would fully support — unless you have enough reform to reduce the deficit, too.”
But Senate Republicans have refused to say whether they would support tax reform that raises net revenues in standard budget-scoring models.
Of nine Republican senators who attended a press conference Thursday morning to urge the supercommittee to take up tax reform, not one said he or she would support tax reform that increased the net burden of taxation.
“None of us want to raise taxes,” said Sen. Saxby Chambliss (R-Ga.). “What we want to do is we want to close the spending and revenues gap. We want to close that 25 percent of GDP that we spend versus that 14-and-a-half percent of revenue that is coming in.”
The Joint Select Committee on Deficit Reduction will hold its next public hearing on Sept. 22. The witness will be Tom Barthold, chief of staff of the Joint Committee on Taxation
—Mike Lillis contributed to this report.