Dems seek $1 trillion tax hike, $3 trillion deficit cut from supercommittee

Democrats have proposed more than $1 trillion of tax increases in a $3 trillion deficit-reduction plan that they dropped with a thud onto the negotiating table of Congress’s supercommittee.

The plan proposed Tuesday by Senate Finance Committee Chairman Max Baucus (D-Mont.) and backed by a majority of Democrats on the panel was presented as a grand bargain that cuts entitlements, stimulates the economy and goes much further than the $1.2 trillion deficit cut required under the August debt-ceiling deal.

More than 50 percent of the deficit reduction in the plan would come from tax increases, one source said. 

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Republicans instantly rejected the offer. Aides dismissed the plan as unserious and said the inclusion of tax increases and stimulus spending shows it is merely a political ploy meant to paint the GOP as intransigent.

Democratic aides said the GOP is once again walking away from a grand bargain that would put the U.S. on a solid fiscal ground, noting that Medicare cuts unpopular with the liberal base, reportedly totaling around $500 billion, were included in the deal.

The grand bargain pushed by Democrats is similar to the one that President Obama put forth to House Speaker John Boehner (R-Ohio) during the summer’s negotiations over raising the debt limit, though it is not identical, aides said.

The leak of the Democratic proposal Wednesday morning lifted the veil of secrecy surrounding the supercommittee, which has been meeting for weeks behind closed doors to find a bipartisan agreement for cutting the deficit. 

The 12 lawmakers on the supercommittee have been tight-lipped about their activities, but the negotiations are becoming public as the Nov. 23 deadline for reaching a deal approaches. 



Boehner and Senate Majority Leader Harry Reid (D-Nev.) are getting involved behind the scenes to help forge an agreement that can pass Congress and ward off the $1.2 trillion automatic spending cuts that will be triggered if the supercommittee dissolves in failure. 


But the inclusion of substantial tax increases in the Democratic proposal — a move that repeatedly derailed the debt-ceiling talks — indicates the two sides remain miles apart on how to address the nation’s red ink.

Democrats are also not unified around some of the elements of the supercommittee proposal.  Not all Democrats on the supercommittee have endorsed the plan that Baucus unveiled. It is unclear, however, which Democrats are opposed to the plan.

Liberals in the House moved quickly to quash any notion that they will support a deal that cuts Medicare.

“The very idea of reducing benefits … is unacceptable,” said Rep. Jan Schakowsky (D-Ill.), co-chairwoman of the Congressional Task Force on Seniors.

The members of the panel returned to negotiations Wednesday afternoon. Democrats said they were waiting to see if their Republican colleagues would present an alternative path to a grand bargain that cuts as much from the deficit.

Leaving that session, Baucus said he is confident the committee will meet its goals, and downplayed the reaction to the “suggestions” he made on Tuesday.

“There was no kerfuffle!” Baucus said.

Earlier Wednesday, at a tense public hearing on discretionary spending, the Democratic co-chairwoman of the supercommittee acknowledged it is running out of time.

“We aren’t there yet, but I’m confident we are making progress,” said Sen. Patty Murray (D-Wash.). “And I’m hopeful we are moving quickly enough to meet our rapidly approaching deadline.”

Congressional Budget Office Director Douglas Elmendorf reiterated at the hearing that his agency must have a deal to score by early November in order for the supercommittee to have legislative language ready by Nov. 23.

“That leaves us looking at the beginning of November, which we are very well aware as you are is not very far away,” Elmendorf said.

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Murray emphasized that she is “willing” to compromise and said she knows “many of my colleagues are as well.” She said that the consequences of failure, which would trigger automatic defense cuts, could be damaging to national security.

Co-Chairman Jeb Hensarling (Texas) emphasized the need for the supercommittee to tackle Medicare, Medicaid and Social Security. The GOP congressman said any changes to discretionary spending would be “helpful,” but alone would not allow the supercommittee to meet its goals. 

He said the supercommittee must devise “quality healthcare and quality retirement security solutions” in order to meet its mandate to “significantly improve the short-term and long-term fiscal imbalance.”

“Everything else we do including dealing with discretionary budget will be helpful but nothing else will solve the structural debt crisis,” Hensarling said.

Sen. Pat Toomey (R-Pa.) pushed back on the calls for stimulus during the hearing, getting Elmendorf to acknowledge it is impossible to prove that the stimulus law passed in 2009 worked.