Despite exchanging a series of proposals in recent days, the super committee remains deadlocked over taxes, leaving members planning for how to handle its failure, staffers in both parties say.
During a Tuesday night meeting of half of the 12-person, bipartisan Joint Committee on Deficit Reduction, a Democratic senator suggested a “time-out," according to one Republican aide. Republicans reacted by accusing Democrats of walking out of negotiations.
The committee's cochair, Sen. Patty Murray, D-Wash., who was in the meeting, and Democratic aides heatedly denied that claim, but it was evident on Wednesday that talks have sputtered even further just two weeks before the committee's Nov. 23 deadline.
With chances of a deal dimming, Republicans are considering introducing their own plan as legislation, and assume Democrats would use the same tactic, according to knowledgeable GOP aides.
Although panel members have publicly outlined three offers recently, staffers said those plans are just the public element of a steady exchange of informal offers. Around the same time as a proposal by Sen. Pat Toomey, R-Pa., that would link eliminating popular tax deductions to reducing marginal tax rates set in President George W. Bush's administration, which Republicans called a major concession, committee Cochair Rep. Jeb Hensarling, R-Texas, floated what sources described as a more purely Republican plan. Aides said the proposal would cut the deficit by almost $4 trillion over 10 years.
“Republicans are floating multiple ideas in an effort to try to come up with a result here,” said a Senate Republican leadership aide.
Like the Toomey plan, which Republicans said would save $1.2 trillion over a decade, Hensarling’s proposal would close loopholes while lowering marginal tax rates. Hensarling would nix $40 billion worth of oil and gas subsides, defer deductions of interest expenses on deferred income, reinstate Superfund taxes, and make permanent an unemployment-insurance surtax. The plan also would repeal a corporate-jet tax deduction, a favorite Democratic target. Republicans, however, concede the plan cuts entitlement programs and domestic spending far more deeply than Democrats would accept.
Murray also outlined a proposal worth about $2 trillion in savings over a decade, following a plan she floated last week that would cut $1.2 trillion – the minimum that Congress must approve to avoid sequestration in 2013. Murray’s latter offer includes $400 billion in discretionary cuts, with half targeting defense and half hitting domestic spending. Aides said it also includes cuts affecting Medicare providers and beneficiaries.
The counteroffers revert to more party-line positions and move away from proposals aimed at winning a compromise, a knowledgeable aide said. The bone of contention continues to be the Bush tax cuts, Republicans said. Republicans want a permanent extension while Democrats want the cuts benefiting the wealthiest to expire, a position a House GOP leadership aide called a "non-starter." After failing to repeal the rates when they controlled Congress and the White House, Democrats lack leverage to demand it now, the aide said.
Republicans say that was the sticking point that prompted the alleged walkout.
“We haven’t stepped away from anything,” Murray said. “There is a lot of conversation, a lot of work going on. We understand the deadline in front of us.”
Democrats say it was the other way around.
“If their last, best offer is a plan that provides a massive tax-rate cut for the very wealthiest Americans, then they’re not serious about getting a deal,” a knowledgeable Democratic aide said. “Democrats remain at the table waiting for them to come up with something realistic.”
Susan Davis contributed