Democrats offer $3-trillion deal to slash deficit
Top super committee Democrats have proposed a “grand bargain”-like offer to their GOP colleagues on the panel, picking up where negotiations between President Obama and House Speaker John A. Boehner broke off this summer over a $3-trillion package of spending cuts and new taxes.
The proposal was intended as a gesture of compromise as the committee struggles to find common ground to slash deficits by cutting spending, raising taxes or both by its Thanksgiving deadline. Summer talks broke down over Republican resistance to new taxes.
Failure of the super committee to reach a compromise is increasingly drawing concern from forces outside of Washington that are worried about another downgrade of the nation’s once-stellar credit rating. Standard & Poor’s issued a downgrade after the summer debt ceiling deal, and other credit rating agencies could follow suit if Washington fails to make progress on reducing its debt load. That would likely spike interest rates for ordinary Americans.
The Democratic proposal was not aired publicly, but sources indicated it would combine spending cuts and new tax revenue as had been discussed this summer. Those earlier talks included changes to the way Medicare’s cost-of-living adjustments are made that would result in cuts to beneficiaries. Such changes could also generate new revenue.
Democrats have been intent on putting cuts to Medicare entitlements on the table if Republicans are willing to agree to some new taxes. But so far, the GOP has resisted new taxes. Instead, Republicans, led by Rep. Dave Camp of Michigan, have pushed for an overhaul of the corporate tax code that would lower tax rates in a way they believe would spur economic growth and generate higher tax revenue.
Seniors’ advocates pounced on the proposal, and said if Democrats intended to send up a trial balloon, it was bound to pop among voters.
“I don’t think it’s going to float very well,” said Eric Kingston, co-chairman of the Strengthen Social Security Coalition.
But the influential Business Roundtable urged the super committee Wednesday to find consensus.
“A successful outcome to this process is critical for future economic growth, job creation and American global competitiveness,” wrote John Engler, the organization’s president.
Get the L.A. Times Politics newsletter
Deeply reported insights into legislation, politics and policy from Sacramento, Washington and beyond. In your inbox three times per week.
You may occasionally receive promotional content from the Los Angeles Times.
