House Dems focus on raising revenue, taxes in supercommittee suggestions

House Democrats are calling for the congressional supercommittee on deficit reduction to raise taxes and other revenue to narrow the nation’s long-term budget shortfall.

Democrats sent a package of recommendations to the deficit panel Thursday from the party’s senior members on 16 committees. The proposals challenge the panel to make more than the $1.2 trillion in required cuts, and includes calls to raise taxes and end subsidies for oil companies. 

“The American people overwhelmingly agree that significant revenues must be included in any plan,” Minority Leader Nancy Pelosi (D-Calif.) said in a letter that accompanied the proposals.

Democrats would raise much of the revenue by allowing the Bush tax rates for upper-income households to expire. The proposals do not spell out whether taxes should be raised on families with annual income over $250,000 or whether the threshold should be $1 million, as set by Senate Democrats last week. 

The call for new revenue revisits the summer debate over raising the debt ceiling, in which President Obama and Democrats demanded that higher taxes on business and the wealthy be imposed in exchange for spending cuts that would hurt the poor and middle class. In the end, the deal signed by Obama included spending cuts but no new taxes.

Under the Budget Control Act that created the deficit panel in August, each congressional committee has until Friday to make recommendations to the supercommittee, although they are not required to do so. The Democrats’ strategy of offering a unified proposal and urging the committee to exceed its mandate differs considerably from that of the House GOP, which chose not to submit a comprehensive proposal to the deficit panel.

Republican leadership aides said individual committees may submit suggestions by Friday’s deadline, and GOP members of the House Administration and Agriculture panels planned to offer recommendations.

Michael Steel, a spokesman for Speaker John BoehnerJohn Andrew BoehnerRift widens between business groups and House GOP Juan Williams: Pelosi shows her power Debt ceiling games endanger US fiscal credibility — again MORE (R-Ohio), said GOP leaders and committee chairmen “talk constantly” with the members of the supercommittee, and would continue to do so. The fourth-ranking House Republican, Rep. Jeb Hensarling (Texas), is BoehnerJohn Andrew BoehnerRift widens between business groups and House GOP Juan Williams: Pelosi shows her power Debt ceiling games endanger US fiscal credibility — again MORE’s appointee as the co-chairman of the supercommittee.

The political dynamics of the effort for broad deficit reduction have shifted in the months since Boehner first broached the possibility of a so-called “grand bargain” with Obama. Those negotiations nearly resulted in a $4 trillion deal. Many congressional Democrats resisted the effort, worried that any deal would contain unacceptable cuts to entitlement programs like Medicare and Medicaid and include minimal revenue increases.

Now, however, Democrats are seizing on the administration’s campaign for higher taxes on the wealthy. 

Other proposals offered Thursday by Democrats included calls to fund schools to prevent teacher layoffs, and to change the law so that Medicaid could pay the drug costs for patients eligible for Medicare. 

With Democrats dug in on taxes, Republican leaders have scaled back their expectations. Majority Leader Eric CantorEric Ivan CantorBottom line Virginia GOP candidates for governor gear up for convention Cantor: 'Level of craziness' in Washington has increased 'on both sides' MORE (R-Va.) has said that given the ideological chasm between the parties on entitlements and taxes, a broader deficit deal is unlikely. And Boehner, who has championed the idea of a “big deal” for months, on Thursday reiterated that the committee’s goal remained between $1.2 trillion and $1.5 trillion in deficit reduction.

“The so-called supercommittee has a big job to do. They know it, we know it,” the Speaker said at a press conference. 

Boehner himself has pushed the supercommittee to include a blueprint for comprehensive tax reform in its recommendations. He did not repeat that call on Thursday, and did not sound optimistic about the possibility that the committee would achieve much bigger reductions. Getting to a number like $4 trillion or $5 trillion, he said, might have to count more than $1 trillion in savings from the end of the wars in Iraq and Afghanistan, which Republicans oppose.

“People can add up a lot of different numbers,” Boehner said when asked if a $4 trillion deal was still possible. “You can take the overseas contingency account, which is about $1 trillion worth of savings as a result of the drawdown of our troops in Iraq and Afghanistan. That’s already going to happen. Some people want to put that into the overall number. Some people want to take the number that we’ve already done — $1.2 trillion worth of discretionary savings — and add it to the number.”

When Senate Majority Leader Harry ReidHarry Mason ReidDemocrats brace for tough election year in Nevada The Memo: Biden's horizon is clouded by doubt Fight over Biden agenda looms large over Virginia governor's race MORE (D-Nev.) included $1.1 trillion in war savings in his $2.7 trillion debt-limit proposal in July, Boehner and other Republican leaders derided it as “budget gimmickry.”

But with the supercommittee less than six weeks away from its Nov. 23 deadline, the GOP might be looking for a way out of the steep defense cuts that would be triggered if it failed to reach the $1.2 trillion goal for deficit reduction.

Democratic leaders included the war savings in their proposal Thursday, and the House GOP included them in its budget earlier this year.