Republicans Offer $300 Billion in New Revenue

by Andrew Stiles

Republicans on the supercommittee appear to be signaling their willingness to compromise on taxes with their latest offer to Democrats: Between $250 billion and $300 billion in new revenue generated by eliminating certain loopholes and deductions in the tax code. In exchange, the Bush rates tax rates would be made permanent and the corporate tax rate would potentially be reduced. National Journal has more:

The aide said the deal would likely be worth a total of about $1.2 trillion – the goal the super committee needs to meet to stave off mandatory sequestration under this summer’s Budget Control Act. It includes $700 billion in spending cuts over 10 years, with roughly half from entitlement cuts, the staffer said. The framework would also include savings from increases in government fees – nontax revenue.

Apparently, Democrats aren’t biting:

One Democratic aide with knowledge of the Republican offer called it a “joke” and said that “Democrats have summarily rejected the proposal as fundamentally unserious.”

The aide said “only Republican math would spend trillions in tax breaks for the wealthy and others and not actually save any money.”

On the right, anti-tax activist Grover Norquist is far from impressed. In an interview with National Review Online, the founder and long-time president of Americans for Tax Reform calls the GOP proposal an “awkward recommendation” that is “going nowhere.”

“They’ve been imagining: ‘Will the Democrats buy this unicorn?’ Except there’s no unicorn,” he says.

Norquist has argued all year that negotiating with Democrats on taxes is a fool’s errand. He believes that any concessions Republicans might make would immediately be seized upon by Democrats to push for even greater tax increases. Fortunately, he says, Republicans have held their ground surprisingly well thus far. “I don’t think the GOP caucus or leadership would tolerate the things that Democrats would insist on to get out of the committee,” he says. “Democrats aren’t interested in revenue increases, they want higher taxes.”

He says the proposed offer would “probably not” comply with the ATR anti-tax pledge, which most GOP lawmakers have signed, and doesn’t Republicans leaders to sign off on any deal that includes a net tax increase. By making the offer, Norquist suggests, Republicans may simply be “trying to get some political leverage by pretending to be reasonable.”

Given how Republicans successfully held their ground on taxes during the debt ceiling debate this summer, “when the threat was the end of the world,” Norquist sees no reason why they would go back on that position now, when the consequences not reaching is deal — automatic spending cuts heavily weighted toward the defense budget — are far less severe. “Now the threat is minor sequestration starting two years from now,” he says. “It’s not much of an action-forcing device, compared to the country going into default. Why would Republicans fold and raise taxes now?”

In response to Sen. Tom Coburn’s (R., Okla.) suggesting that he would be “willing to take some tax increases,” despite signing a letter to supercommittee members urging them not to raise taxes, Norquist says the senator needs to make up his mind. “He’s really got to decide how he wants to operate,” Norquist says. “Evidently signing his name to something doesn’t mean anything. I wouldn’t lend him money if I was a bank.”

As the supercommittee edges toward the November 23 deadline, the distinction between “revenue” and “tax increases” will continue to cloud the debate, which ought be about federal spending. “Republicans are always for more revenue that comes from more people working,” he says. “The problem is when Democrats say more revenue they want higher taxes, which leads to all sorts of confusion and it won’t stop until the final bell.”

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