Budget

Budget chief wants plan with 50-50 split between spending cuts and tax hikes

Sen. Kent Conrad (D-N.D.) on Tuesday presented a budget
proposal to Senate Democrats that calls for an even balance — 50 percent to 50
percent — of spending cuts and tax increases to reduce the deficit.

The emerging consensus on Capitol Hill is there should be at least $4 trillion in deficit reduction over the next 10 years. To
meet that goal, Congress would have to increase tax revenues by $2 trillion
over the next decade with an equal amount of spending cuts.

Senate Majority Leader Harry Reid (D-Nev.) said, “Four trillion dollars is a number that has been floated around here because that’s what the
Bowles-Simpson deficit reduction plan came up with,” making reference to the
fiscal commission established by President Obama.

{mosads}“We’re looking at large amounts of money that we have to
work toward saving,” Reid said. “But it can’t all be done by cutting domestic
discretionary spending.”

Reid said Sen. Conrad presented to the caucus a 50-50 split when asked about the preferred ratio of spending cuts to tax
increases.

That’s a more even ratio between spending cuts and tax increases than what President Obama’s debt commission recommended last fall. It suggested reducing deficits through two-thirds spending cuts and one-third tax increases. 

In a speech last month, Obama suggested a 3-1 ratio between spending cuts and tax increases in laying out his vision for reducing deficits. 

Conrad has moved his budget proposal to the left in order to
gain the support of Sen. Bernie Sanders (I-Vt.), an outspoken progressive on
the budget panel. Sanders has called for “shared sacrifice” in reducing the
deficit and wants to increase taxes on families earning over a $1 million a year. 

Republicans have repeatedly argued that taxes do not need to
be increased because Washington has a spending problem, not a revenue problem,
according to the talking points echoed by many conservative lawmakers. 

Sanders wants Democrats to take a “hard look at corporate
welfare” and argues there’s “huge amounts of money to be gained by ending a
number of provisions which enable corporations who make billions of dollars in
profits to pay nothing in taxes.”

Sanders criticized Conrad’s first budget proposal, which
the chairman shared with the Democratic conference last week, for not requiring
more sacrifice from corporations and wealthy taxpayers to balance the budget.

Conrad has scrambled to win Sanders’s support over the
past week. Without his vote, Conrad can’t pass a budget out of the Budget
Committee, which is narrowly split between 12 Democrats and 11 Republicans.

“His budget has made real progress in the last week,”
Sanders said after listening to Conrad’s presentation Tuesday afternoon. “It’s
a more progressive budget, and I think it’s a stronger budget than a week ago.”

Sanders said any budget plan he supports at a minimum must
have an even balance between spending cuts and tax increases.

“I would hope for more,” he said. “Given the fact that we
have seen a growing disparity of income in this country, tax rates for the very
wealthy have gone down, there are all kinds of corporate loopholes, I think
certainly more than half of the tax reduction should come from that area,
raising revenue.”

Republicans vow to strongly oppose any deficit-reduction
proposals that increase taxes.

“I renew my pledge this morning to do what it takes to
make sure we avert it without raising taxes or building in automatic tax
increases in the future, which would only destroy jobs,” Senate Republican
Leader Mitch McConnell (Ky.) said on the Senate floor Tuesday morning.

— This story was updated at 3:20 p.m.

Tags Bernie Sanders Harry Reid Mitch McConnell
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