Super Committee: Dems Propose Big Cuts, New Taxes on Rich

Washington – Faced with an approaching deadline and increasing skepticism about Congress’s ability to accomplish the task before it, Democrats on a special Congressional committee assigned to reduce the nation’s debt load on Wednesday made their first offer to Republicans based on earlier budget talks that ultimately collapsed.

A majority of the 6 Democrats on the 12-member panel threw their support behind a plan that they said incorporated some ideas discussed over the summer by President Obama and Speaker John A. Boehner.

The committee is charged with cutting budget deficits by a total of at least $1.2 trillion over 10 years. The Democratic plan would trim much more, a total of $2.5 trillion to $3 trillion, through cuts in the growth of federal entitlement programs, including Medicare, and more than $1 trillion in new tax revenues.

The proposal, which came after weeks of silence, has virtually no chance of winning approval from Republicans on the committee, who have repeatedly said they would not accept a package that included tax increases.

A Republican Congressional aide said the Democrats’ proposal was not serious. “I do not know why anyone would believe that Republicans would ever agree to more than $1 trillion in taxes,” said the aide, speaking on condition of anonymity, in keeping with restrictions imposed by the co-chairmen of the panel. “It is ridiculous, nothing more than political posturing.”

Other Republicans sounded more optimistic, suggesting that the proposal defined the outer bounds for negotiations, which could now begin in earnest.

The panel, divided evenly between Democrats and Republicans, began meeting last month to attack the deficit, as required by a law passed this summer allowing the debt ceiling to rise.

The panel is supposed to make its final recommendations by Nov. 23, and both houses of Congress are supposed to vote by Dec. 23. If legislation to save at least $1.2 trillion is not enacted, the president in January 2013 is supposed to make up the difference by imposing across-the-board cuts in most military and civilian programs. Republicans are particularly concerned about cuts in Pentagon spending.

The Democrats’ proposal includes new spending to stimulate the economy and create jobs, based on their conviction that economic growth would generate a surge in revenue. Republicans have strenuously opposed an increase in tax rates, to reduce the deficit or to pay for new spending. The Democrats’ plan also calls for several hundred billion dollars of savings in Medicare, though it was unclear how those savings would be achieved.

In April, Mr. Obama proposed savings of at least $200 billion in Medicare and at least $100 billion in Medicaid.

The proposal by Democrats on the deficit-reduction committee draws heavily on ideas discussed by Mr. Obama and Mr. Boehner. Those discussions included a possible increase in the age of eligibility for Medicare to 67, from 65. However, Democrats on the committee said their proposal did not include a change in the eligibility age — a proposal that had caused dismay among many advocates for older Americans.

Democrats said their proposal was meant to show that they were flexible, offering constructive solutions and reaching out to Republicans. Republicans countered with ideas of their own, including deeper cuts in domestic spending and entitlement programs, as well as new fees.

At a public hearing of the committee on Wednesday, Senator John Kerry, Democrat of Massachusetts and a panel member, hinted at his party’s plan when he asked the director of the Congressional Budget Office, Douglas W. Elmendorf, to explain the potential economic benefits of a deal reducing deficits by $3 trillion over 10 years.

To achieve such a reduction, Mr. Kerry said, the ratio of spending cuts to new revenues might be “3 to 1 or 2 to 1.”

For the purpose of discussion, Mr. Kerry said, he assumed that the revenue would “come exclusively from the highest-end people,” those with the highest incomes, who had the largest gains in income in the last 25 years.

Mr. Elmendorf said that a sweeping agreement with 10-year savings of $3 trillion to $4 trillion could have “a positive effect” on output and employment. By contrast, Mr. Kerry said, if lawmakers settle for a deficit-reduction package of $1.2 trillion or $1.5 trillion, Congress may be “back here in about a year or two, or three at maximum, dealing with the very same issues that are on the plate now about the unsustainability of our budget.”

Representative Bill Pascrell Jr., a New Jersey Democrat who is not on the committee, said that Republican resistance to new taxes was reducing the probability of a deal.

Democrats will never agree to substantial savings in Medicare and Social Security if the deal does not include new revenues, Mr. Pascrell said.

Looking to the deadline just four weeks away, Mr. Pascrell said: “Come Thanksgiving Day, I hope we have something to be thankful for. I would say, at this point, we will be thankful for our families, our faith and our country. But we will not be thankful for a resolution of the budget problem.”