Lawmakers have ‘fiscal cliff’ menu of options from failed debt talks

When Congress gets down to business on the “fiscal cliff” after the election, they won’t have to look far for proposals to reverse it.

Lawmakers already have a menu of policy options leftover from several rounds of bipartisan negotiations on the deficit, including the talks held last summer by Vice President Biden and the work of the failed congressional “supercommittee.”

Aides say lawmakers don’t need to reinvent the wheel to come up with a “down payment” on the debt that could be part of an agreement to at least replace the $109 billion spending cut, known as sequestration, set for 2013.

Such a deal might be accompanied by a tax and entitlement reform framework for future action that extends the expiring Bush-era tax rates, though the parties remain bitterly divided over whether to let the rates on high-earners expire.

House Republicans laid out their own plan for stopping sequestration in a bill that was passed in May and plan to use it as their opening position. It contained some policies that are anathema to the Obama administration and Democrats, such as defunding provisions of the Dodd-Frank financial reform and the healthcare law, but also some elements with bipartisan appeal.

The Hill has compiled a list of what might fall under the budget axe if congressional leaders strike a deal at the end of the year.

The likely targets were drawn from the 2011 talks between President Obama and Speaker John BoehnerJohn Andrew BoehnerGOP revolts multiply against retiring Ryan Can Jim Jordan become top House Republican? Tensions on immigration erupt in the House GOP MORE (R-Ohio); Obama’s budget proposals; the Biden-led deficit talks; the proposal from the Senate’s “Gang of Six,” and the sequestration bills that have passed and been proposed in the House.

Here’s a list of what could be on the table:

Food stamps: House Republicans found $16 billion in savings in their sequestration bill by including a provision that would make it more difficult for recipients of home heating assistance to qualify for food stamps. Some Democrats have supported the policy changes in the stalled farm bill.

Tort reform: President Obama at various times, including during the 2011 State of the Union address, expressed openness to medical malpractice tort reforms. The House sequester bill establishes a three-year statute of limitations, caps noneconomic damages at $250,000 and limits contingent fees, among other money savers.

Agency appropriations: It is unclear whether agency budgets outside the Pentagon would be targeted in a down payment. Most of the sequestered cuts come from agency budgets, with the biggest chunk of $55 billion coming from defense. The House and Senate extended agency funding in September until the end of March, but the House sequester bill gets $19 billion in savings from cutting appropriations.

The House Appropriations Committee has produced 12 bills that include the added $19 billion savings. Chairman Hal Rogers (R-Ky.) would be thrilled to revive his bills in the lame duck, but Senate Democrats have been firm that they do not want to cut discretionary spending below the current level.

Federal worker benefits: The Biden talks and the House bill have both looked at federal worker retirement programs. The House bill would increase employee contributions by 5 percent and would end the Federal Employees Retirement System (FERS) annuity for new hires. The failed Biden talks found $47 billion in savings from changing the pensions.

Child tax credit: The House’s sequestration bill would require a Social Security number to claim the child tax credit. Republicans argue that this cracks down on illegal immigrant use of the program and saves money, but it is unclear if liberals would go along.

Farm subsidies: Lawmakers involved in the Biden group found $33 billion in cuts to farm subsidies and conservation programs, while the sequester alternative from House Democrats cuts $24 billion. To achieve the savings, rural lawmakers would have to abandon plans for expanded crop insurance.

Seniors’ programs: The House GOP’s sequestration bill cuts block grants for social services for seniors. On Medicare, the Obama-Biden talks looked at increasing the Medicare eligibility age and increasing means testing in the program to limit benefits for the well off.

Oil tax breaks: House Democrats have proposed reining in the tax breaks claimed by the five biggest oil and gas companies. It would end the use of the 9 percent “section 199” domestic manufacturing tax credit, end the use of last in, first out (LIFO) accounting which tends to lower the value inventory, and change tax rules that allow a tax credit for income taxes paid by multinational companies to foreign countries. The Obama budget proposals would end tax breaks for a wider group of oil and gas companies.

"Buffet rule" tax hikes: The House Democratic bill would raise $46 billion by imposing a minimum tax rate on those make above $1 million, no matter what the source. Including a proposal like that in a “fiscal cliff” deal could allow the White House to extend the Bush-era rates and still claim that they are making “millionaires and billionaires pay their fair share.”

Medicare: Democrats have proposed allowing Medicare to use its bargaining power to lower drug prices and the Biden talks looked at reducing payments for drug’s by the military’s TriCare insurance program. The Biden talks also looked at cutting medical education and spending on skilled nursing facilities, home healthcare and durable medical equipment.

Pell Grants: The grants for students were exempted from sequestration, and both Mitt Romney and Obama have talked about preserving them. But Pell Grant changes were on the table in the Biden negotiations and could resurface.

Medicaid: The Obama administration has looked at $100 billion in savings by streamlining federal payments to states to administer the program, a move that would shift costs onto state budgets.

Corporate jet break: Obama proposes raising $5 billion in revenue from changing the depreciation rules for corporate jets.

Coal companies: Obama would get $2 billion by eliminating coal tax breaks.

Multinational companies: The president has a host of proposals to raise taxes on companies that do business abroad, such as capturing the value of intangible assets abroad.