This week, Democratic and Republican members of the so-called “supercommittee” unveiled competing deficit-reduction proposals, both of which were subsequently rejected by the other side. The details are still a bit rough, but here’s a brief rundown:
The Democratic plan — Between $2.5 and $3 trillion over 10 years:
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$1.3 trillion in new tax ($800 billion from letting the Bush tax rates expire on high income earners).
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$600 billion in savings from Medicare, Medicaid and other health-care spending.
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$250 billion in savings from other mandatory spending.
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$400 billion in discretionary spending cuts (half defense, half non-defense).
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$300 billion in new spending, in line with President Obama’s jobs proposal.
The Republicans plan — Between $2 trillion and $2.2 trillion over 10 years:
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$640 billion in new revenues (no new taxes, about $440 billion from increased fees and adjustments to health-care premiums, and $200 billion from projected economic growth as a result of revenue-neutral tax reform).
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$800 billion in savings from Medicare, Medicaid and other health-care spending.
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$400 billion in savings from other mandatory spending.
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$250 billion in discretionary spending, reduced personnel costs.
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$0 in new spending.
The 12-member panel has until Nov. 23 to come up with at least $1.2 trillion in deficit reduction that Congress must then vote on before Christmas. Since its formation, as called for in the August deal to raise the debt ceiling, the supercommittee has operated largely behind close doors. The leaked plan signal that negotiations are entering the final stretch of what is sure to be another contentious showdown over federal spending. As I wrote yesterday, the major ratings agencies will be keeping a close eye on Congress over the next couple of months. If the supercommittee fails to hit the $1.2 trillion target, or fails agree on a plan altogether, or even if there is a plan and Congress shows itself to be hopelessly dysfunctional in its effort to pass it, Wall Street analysts have warned that another downgrade of the country’s credit rating is in the offing.
House Speaker John Boehner (R., Ohio), who along with Senate Majority Leader Harry Reid (D., Nev.) has become increasingly involved in the supercommittee’s deliberations, rejected the Democratic proposal, telling reporters that the proposed tax increases were unacceptable.
“This is the same number that was in the president’s budget, the same number that I don’t know if they found any Democrats in the House and Senate to vote for,” Boehner said. “And so, I don’t think it’s a reasonable number.”
The speaker said he was committed to a solution that satisfies the $1.2 trillion requirement, but acknowledged that reaching an agreement would be difficult. “I’ve had lots of conversations with lots of people trying to ensure that we do in fact get to an outcome,” he said. “I’m not surprised that we’re having some difficulty, because this isn’t easy. It’s going to be very hard. But I do think it’s time for everybody to get serious about it.”
Meanwhile, House Minority Leader Nancy Pelosi (D., Calif.) told reporters that the Republicans plan was unpalatable because it lacked significant tax increases. “If it’s going to be bold, that doesn’t do it,” she said.
However, Pelosi didn’t exactly endorse the Democratic plan either, saying she’s “not making any judgment.” In fact, reports indicate that some Democrats, including potentially a couple members on the supercommittee — Rep. James Clyburn (D., S.C.) and Xavier Becerra (D., Calif.) — are not pleased with the proposed changes to entitlement programs outlined in the Democratic plan, even though the changes would taken directly from recommendations put forward by President Obama.