Lawmakers on the congressional supercommittee made no visible progress ahead of a Nov. 23 deadline for a debt-reduction deal even as negotiators picked up the pace of bipartisan talks aimed at an agreement.
Republicans and Democrats offered a series of competing plans in the past week as they seek at least $1.2 trillion in deficit savings over the next decade, all of them rejected by the opposite side as negotiators offered little sign of progress or optimism.
The 12-member supercommittee, created in the aftermath of a rancorous debate over raising the nation’s debt ceiling in August, is struggling to find deficit reductions while Republicans reject Democrats’ demands for tax increases and Democrats oppose Republican efforts to make changes in entitlement programs such as Medicare.
“It looks like a standoff,” said former Democratic U.S. Senator Byron Dorgan, who is now a lobbyist. “Nobody’s ever created a supercommittee where you have 523 members of Congress that are not involved and 12 who are working largely in secret,” he said. “It was generally a bad idea from the start.”
Even if negotiators are able to reach a compromise, some House Republicans signaled that any agreement with tax increases probably won’t pass the Republican-controlled chamber.
“It would be difficult” to win passage of a plan that includes more taxes, said Representative Jim Jordan, head of the fiscally conservative Republican Study Committee, in a Bloomberg Television interview yesterday. “They may not get to some kind of agreement.”
Working against a Nov. 23 deadline for a deal, Democrats rejected a plan Republicans offered as a fallback. The Nov. 17 package included $643 billion in deficit reductions, a Republican leadership aide said yesterday. Democrats spurned it because it didn’t include enough revenue increases, according to a Senate Democratic leadership aide. Both aides spoke on condition of anonymity because they weren’t authorized to discuss the supercommittee negotiations.
The plan is “unacceptable,” said Democratic Senator John Kerry
of Massachusetts. Not requiring more taxes from high earners would be “unconscionable,” Kerry said. He said he remains hopeful for a deal, “but I don’t know at this time.”
The Republican aide said the party’s proposal included $640 billion in spending cuts and interest savings, and $3 billion in revenue raised by ending a tax break for corporate jet travel; it didn’t change entitlement programs such as Social Security, Medicare and Medicaid opposed by Democrats, the aide said.
“Where the divide is right now is on taxes, whether or not the wealthiest Americans should share in the sacrifice,” Democratic Senator Patty Murray, the co-chairwoman of the panel said going into a meeting yesterday.
“It looks harder today than it did certainly two weeks ago,” supercommittee member Chris Van Hollen, the top Democrat on the House Budget Committee, told Bloomberg Television yesterday.
Later he met with a bipartisan group of five senators on the supercommittee to try to break the logjam. Most Republican lawmakers shunned the spotlight, with Senator John Kyl of Arizona saying only, “the meeting went just fine.”
Representative Dave Camp, a Michigan Republican and panel member, said time is running out and blamed Democrats.
“They really have not been willing to make the common- sense spending reductions we need to make but yet are continuing at the same time to insist on $1 trillion in job killing tax increases,” Camp told reporters.
To meet the Nov. 23 deadline for panel approval of a plan, the nonpartisan Congressional Budget Office must estimate its impact on the deficit. Legislators must have 48 hours to review the CBO’s findings before they vote.
Failure by the supercommittee to agree on a plan by Nov. 23 could trigger automatic, across-the-board spending cuts of $1.2 trillion starting in January, 2013. That process, called “sequestration,” is designed to spare the U.S. from another credit downgrade.
After Standard & Poor’s downgraded the U.S. AAA debt on Aug. 5, the government’s borrowing costs fell to record lows as Treasuries rallied. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5 to below 1.72 percent on Sept. 22. The yield on the 10-year note was at 2.01 percent at 5:14 p.m. yesterday, New York time, according to Bloomberg Bond Trader prices.
“Sequestration will give us progress whether people like it or not,” said Representative Xavier Becerra, a California Democrat on the panel. Even so, he compared the process, which would cut both domestic and defense programs, to “a guillotine.”
A bloc of congressional Democrats said they are worried about proposals under discussion, such as lowering the top tax rate to 28 percent from 35 percent or cutting spending by $876 billion.
Democrats who represent districts with many elderly or low- income residents said sequestration is preferable to some options being considered by the supercommittee, such as limiting benefits in programs like Medicare.
“Sequestration is not the worst thing that could happen,” said Representative Keith Ellison, a Minnesota Democrat and co- chairman of the Congressional Progressive Caucus. “Getting a deal where there’s minimal revenue and all cuts on ordinary people, I’d rather see sequestration than that.”
Republican activists increased pressure on their party’s lawmakers to block any compromise that involves increasing taxes. Former U.S. Attorney General Edwin Meese circulated a message to a group of fiscal and social conservatives who are to meet in Washington next week and plan a news conference Nov. 22.
“Conservatives have been down this ‘Read My Lips’ road before, and any increase in taxes will be a betrayal of the promises made during the 2010 campaign,” Meese wrote, referring to then-Vice President George H.W. Bush’s campaign-trail pledge never to raise taxes, which he broke as president.
Representative Jeb Hensarling of Texas, the supercommittee’s Republican co-chairman, has said Republicans won’t go beyond their offer to raise tax revenue by $300 billion until Democrats offer a plan to address the growth in spending on entitlement programs.
House Democratic leader Nancy Pelosi of California said the “only way we will be able to reach an agreement” is if Republicans accept balance between revenue increases and spending cuts.
President Barack Obama, winding up his nine-day trip to Pacific Rim nations, hasn’t been in contact with congressional leaders on the supercommittee talks, according to spokesman Jay Carney. Carney said the president has been in “regular contact with his staff in Washington, including those who are monitoring” the deficit-reduction talks.
© Copyright 2014 Bloomberg News. All rights reserved.