Hensarling says GOP is willing to consider new Dem tax proposals

Republicans on Wednesday signaled they would consider higher tax revenues to win a supercommittee deal if Democrats offer deeper cuts to entitlement spending.

Rep. Jeb Hensarling (Texas), a conservative Republican who is the co-chairman of the deficit supercommittee, walked back a statement he made Tuesday on television, when he said Republicans “have gone as far as we feel we can go” by offering to raise $250 billion in new tax revenues.

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Briefing reporters on Wednesday, Hensarling said Republicans would be “more than happy to negotiate” around a new offer from Democrats, pointedly declining to say whether $250 billion was the maximum in new revenue the GOP could accept.

“I’m waiting for the Democrats to put fundamental reform on the table,” Hensarling said.

He called on Democrats to make an offer that included significant changes to Medicare, Medicaid and overall healthcare spending. “I’m not going to negotiate against myself. That is one offer we have put on the table that they can accept,” Hensarling said.

Republicans are under pressure to win a deal to avoid automatic cuts to Pentagon spending that would be triggered if the supercommittee fails to agree to at least $1.2 trillion in deficit cuts over 10 years. The prospect of those cuts has given Democrats leverage, and both sides have worked to cast the other party as inflexible.


Cuts to Medicare would also be triggered under the summer deal to raise the debt ceiling, but critically, these cuts would be limited to insurance companies and would not touch entitlement benefits. Social Security and Medicaid are exempt from the automatic cuts.

Hensarling’s comments came as leaders in both parties sought to bridge an ideological gulf exactly one week before the supercommittee’s Nov. 23 deadline to propose at least $1.2 trillion in deficit savings.

Republican and Democratic members of the debt panel huddled separately throughout Wednesday, with both sides acknowledging the obvious: Time is running out.

“We continue to meet, and we continue to negotiate, but in the back of our minds we know the stroke of midnight is coming soon,” Hensarling said. He noted that the supercommittee must submit proposals to the Congressional Budget Office by Monday.

“Time’s ticking away,” GOP panel member Rep. Dave Camp (Mich.) told reporters as he left a meeting in Speaker John Boehner’s (R-Ohio) office late Wednesday.

Hensarling said Democrats must offer to seriously tackle entitlement spending before Republicans move off their principal public offer of $1.2 trillion in budget savings, with $250 billion in new net taxes.

“I give my Democratic colleagues credit for at least putting some reforms on the table, but they do not solve the problem,” Hensarling said. Until they propose a plan that does, he said, Republicans won’t move.

“We’re not changing this offer we have on the table,” he said.

Hensarling’s hard-line comments Tuesday in an appearance on CNBC threatened to explode the delicate negotiations, but on Wednesday he made it clear the GOP could move in reaction to a new Democratic offer.

“We wait for their solution, so I’m not rejecting any offer out of hand,” Hensarling said Wednesday. “Quite the opposite. I’m still waiting for a new offer to be put on the table. … Should that offer come, I am more than happy to negotiate around that offer.” 



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Hensarling said Republicans had made “multiple offers,” but would not describe any of them except for the one that has become public: a $1.2 trillion deficit plan from Sen. Pat Toomey (R-Pa.). The GOP offer on revenues is predicated on blocking a tax increase in 2013 that would come with the expiration of the George W. Bush-era tax cuts. Republicans are proposing to permanently lower business and income rates while generating revenue by scrapping deductions, which aides note are used primarily by the wealthy.

Hensarling specifically urged Democrats to embrace a Medicare proposal from the bipartisan Rivlin-Domenici commission, which would partially shift Medicare to a premium support system. Democrats have opposed the proposal as privatizing Medicare, and aides pushed back on Hensarling’s comments by noting that the GOP’s own supercommittee proposal does not mention premium support.

Democrats dismissed Hensarling’s claim on entitlement reform, arguing that the $350 billion in Medicare cuts they have proposed in their larger plan is actually bigger than the Medicare cuts the GOP offered in its smaller proposal.

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Republican leaders were being pulled in opposite directions Wednesday within their own party. A bipartisan group of more than 150 House and Senate lawmakers renewed their call for the supercommittee to “go big” and strike at least a $4 trillion deal that included new tax revenues, entitlement reforms and discretionary spending cuts.

As part of that coalition, the third-ranking Senate Republican leader, Sen. Lamar Alexander (Tenn.), argued that Republicans on the supercommittee needed to offer more revenues if the deficit panel hopes to balance the country’s books.

“This is about more than money, it’s about whether the president and the Congress can competently govern,” Alexander said. “We now have Republicans who have put revenues on the table [and] we have Democrats on the supercommittee who have put entitlements on the table.

“Both need to put more on the table and get a result, and we’re here to support them,” he said.

From the right flank, the conservative Republican Study Committee circulated a letter opposing any net increase in tax revenues.

“With current levels of taxation already limiting economic growth, we believe that marginal rates must be maintained or lowered and that repeal of any tax credit or deduction be offset with an equal or greater tax cut,” the lawmakers wrote in a letter that was highlighted by Grover Norquist’s Americans for Tax Reform.

On the other side, a liberal group, the Campaign for America’s Future, urged the deficit panel to fail, arguing that steep budget cuts would be “ruinous” for the already fragile economic recovery.

Hensarling looked for help from President Obama, who is traveling in Australia. He noted that he told the president in a phone call last Friday that he wanted Obama to clarify or rescind a veto threat he issued to Congress back in September, when he said he would reject any plan to overhaul entitlement programs without asking the wealthy to pay more in taxes.

“His veto threat has been widely interpreted to mean there can be no reforms of our unsustainable Medicare and healthcare spending until attached to a trillion-dollar tax increase that we believe fundamentally would make the jobs crisis even worse,” Hensarling said.

“As I indicated to the president, if that was not indeed his wish, then he should either clarify that veto threat or withdraw that veto threat,” he added. “That is something that could be very helpful for the president to do to these negotiations.”

— Mike Lillis, Erik Wasson and Molly K. Hooper contributed.

— Posted at 3:27 p.m. and updated at 8:02 p.m.


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