Democrats on ‘super committee’ propose a ‘grand bargain’

“Super committee” Democrats proposed a “grand bargain” of spending cuts and new taxes to reduce deficits, picking up Wednesday where President Obama and House Speaker John A. Boehner broke off this summer, as the panel has four weeks left to strike a deal.

The package, worth up to $3 trillion, was a first peek at what have been mostly closed-door deliberations. But it drew swift resistance from Republicans, who objected to the inclusion of new taxes.

“I don’t think it was seen as a serious offer,” said a GOP aide familiar with the discussion, who was not authorized to speak on the record.

Republicans also disputed the characterization that the Democrats’ proposal resembled what Boehner and Obama tried to accomplish.


The proposal was not aired publicly, but sources indicated that it would combine spending cuts to the Medicare and Medicaid programs with higher taxes on the wealthy. Those familiar with the presentation differed on its ratio of spending cuts to new taxes, with some saying it relied more heavily on tax revenue.

The $500 billion it would cut from Medicare and Medicaid picked up where the summer’s negotiations left off. It proposes $400 billion in Medicare cuts equally divided between beneficiaries and providers, and up to $80 billion in cuts to Medicaid.

Revenue would be raised mostly by bumping up the high-end tax bracket and limiting deductions for upper-income earners, those familiar with the talks said.

The Democrats’ plan also included using interest savings to pay for elements of Obama’s $447-billion jobs proposal, an idea Republicans have shot down.

The “super committee” has until Nov. 23 to reach agreement on a proposal to reduce the nation’s deficits by at least $1.5 trillion over the next decade. Failure to cut at least $1.2 trillion would trigger mandatory cuts in 2013 that many are skeptical would ever take place.

Leading credit agencies have indicated that they want to see a serious effort to rein in the nation’s debt load or the country risks having its once-stellar credit rating further downgraded, which would probably increase interest rates for ordinary Americans.

The influential Business Roundtable, which includes the chief executive officers of some of the nation’s leading companies, urged the committee Wednesday to find common ground.

“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.


Doug Elmendorf, director of the Congressional Budget Office, testified Wednesday that failure to cut deficits “would have a negative effect” on consumer and business confidence and spending, which experts say is the biggest drag on the economy.

Bristling at criticism that the committee had been bogged down and unable to forge consensus, several members of the panel — made up of six Democrats and six Republicans — contended Wednesday that they were working at it.

“We’re not there yet, but I’m confident we are making progress,” said Sen. Patty Murray (D-Wash.), the co-chair, during an open hearing that showed the strains of what have been described as heated talks.

The Democratic proposal was intended as a gesture of compromise. Democrats have been willing to put on the table cuts to Medicare and other entitlement programs that are dear to their constituents, but only if Republicans will agree to some new taxes.


Republicans have pushed instead 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 revenue.

Also on Wednesday, Rep. Dave Camp (R-Mich.), a committee member, unveiled a draft corporate tax proposal that would lower rates to 25% from 35% and allow American companies to repatriate overseas profits at a lower rate.

The deficit-cutting proposals arrived against the backdrop of a new Congressional Budget Office report showing the widening gap of income disparity over the last 30 years, with the incomes of the top 1% of Americans growing 275%. The incomes of the 60% of Americans in the middle brackets grew less than 40% over the same period.

Advocates for senior citizens immediately pounced on the proposals to cut Medicare benefits by what they presume would be a change to cost-of-living adjustments that was floated this summer.


“I don’t think it’s going to float very well,” said Eric Kingson, co-chair of the Strengthen Social Security Coalition.