Deficit reduction panel reaches crucial juncture

Congress’ “super committee” on deficit reduction moves into its serious negotiation stage this week, with its members still far from the goal of reducing the deficit by $1.5 trillion over the next decade.

Negotiators from both parties emerged from their secret talks in recent days to float a pair of partisan deficit-cutting proposals. Both were swiftly shot down.

The super committee has until Thanksgiving to reach an accord. A deal to reduce the deficit has eluded Congress this year because of a simple stalemate: Republicans refuse new taxes and Democrats will agree to cut federal programs only if new revenues are in the mix.

If the committee fails, a series of automatic spending cuts is set to kick in to reduce military and domestic spending. Lawmakers from both parties also fear that a failure could cause turmoil in financial markets.

House Speaker John A. Boehner (R-Ohio), who walked away from summer debt talks with President Obama over the tax issue, acknowledged the rough road ahead.

“I’m not surprised that, you know, we’re having some difficulty,” Boehner said. “This isn’t easy.”

The Republicans’ opening offer was a $2.2-trillion proposal that resists new taxes, in keeping with the anti-tax pledge most GOP lawmakers have signed with activist Grover Norquist’s Americans for Tax Reform.

Instead, the GOP plan would cut corporate and individual taxes, which they say would expand the economy and spur new revenue. They also proposed $1.2 trillion in steep cuts to government spending.

Democrats called the proposal a “joke.”

Democrats suggested a “grand bargain” of up to $3 trillion in deficit reduction. Their proposal mixed $1.3 trillion in tax hikes on wealthier households and cuts to federal programs, including the Medicare and Medicaid health programs that have been hallmarks of the party platform. Those cuts were a gesture of their willingness to compromise, Democrats said.

Democrats also proposed paying for portions of Obama’s $447-billion jobs package by using the interest savings that would come about by reducing the debt.

Republicans called the plan not serious.

The opening bids went beyond the committee’s mandate of slashing deficits by $1.5 trillion over the next decade, heeding the call of budget hawks and Wall Street analysts who have warned that the country’s finances are on an unsustainable path.

The 12-member panel, made up equally of Democrats and Republicans, was formed as part of the summer debt-ceiling deal and has limited time to work.

Outside advocacy groups have intensely lobbied the committee to protect various industries and interests, including senior citizens.

At the same time, business leaders have pushed the committee to reach an agreement and avoid upsetting the financial markets in a way that could impede the nation’s economic recovery.

Obama has largely stayed out of committee deliberations, but the White House indicated Friday that deficits should be reduced by a balanced combination of spending cuts and new taxes.

Press Secretary Jay Carney said it was unacceptable to the president to have a deal that “puts all the burden on middle-class Americans and struggling Americans.”

The panel will meet again publicly this week with leading budget hawks, including former Sen. Alan Simpson, a Republican, and Democrat Erskine Bowles, the co-chairmen of Obama’s bipartisan fiscal commission, which recommended a deficit reduction package of more than $4 trillion.

As the committee struggles, a bipartisan group of House lawmakers has urged a large-scale deal — offering possible votes of support if the panel can forge a compromise.

“Put party affiliations aside, and work together for the sake of our country’s future,” the letter from Rep. Heath Shuler (D-N.C.) and other lawmakers said.

lisa.mascaro@latimes.com