Democrats Offer $1-Trillion Tax Increase in Super Committee Deal

Matt Cover | November 10, 2011 | 9:28pm EST
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Senate Majority Leader Harry Reid (D-Nev.) (AP Photo)

( – Democrats have offered a deal -- after rejecting a GOP offer earlier this week -- that would cut $1 trillion in projected spending over the next 10 years and raise taxes by $1 trillion over 10 years, according to documents leaked to Talking Points Memo.

Democrats are proposing to match any spending cuts with new tax increases, attempting to find $1 trillion in savings to match $1 trillion in new taxes.

The Democrats’ plan calls for cutting $400 billion from Medicare and Medicaid and another $400 billion from a combination of defense and non-defense programs in equal amounts.

It also calls for an additional $200 billion in cuts from unspecified “provisions currently being discussed by JSC.” JSC is the initials of the Joint Select Committee, the formal name of the Super Committee.

The Super Committee is charged with writing legislation to reduce deficit spending by $1.5 trillion over the next decade. If Congress fails to enact legislation to do that, $1.2 trillion in automatic budget cuts will take effect. Those cuts would be split 50-50 between domestic and defense spending.

The Democrats’ new tax proposals consist of a “down payment” of $350 billion coming from “miscellaneous revenue provision” and a $650-billion proposal to punt tax reform down the road until January. The plan also includes a “trigger” that would raise $650 billion, if Congress does not enact the tax reform Democrats are proposing. The trigger would increase taxes $350 billion by limiting deductions for “higher income” people and another $350 billion increase by imposing a new “deficit reduction charge,” which would apply to a taxpayer’s taxable income, before any deductions are taken.

The plan contains another catch, saying that the $400 billion in entitlement cuts come only after tax reform has passed or the penalties for not passing it have taken effect.

The final point of the offer is that it proposes to use funds currently being used to fight the wars in Iraq and Afghanistan to pay for the Medicare “Doc Fix” and to fund an unspecified jobs bill.

President Barack Obama. (AP Photo/Charles Dharapak)

Republicans, who offered their own deal on Nov. 7, say that Democrats are not taking the negotiations seriously, choosing instead to leverage the talks to aid in President Obama’s reelection efforts.

“The Republicans have offered tax reform that lowers tax rates and closes loopholes,” Sen. Rand Paul (R-Ky.) told talk-radio host Sean Hannity on Wednesday. “The president talks about millionaires not paying their taxes. We are trying to close some loopholes, but we want to be part of tax reform. We have offered a serious credible offer, but bascially they have walked away from the table.”

As for Obama, Paul said that it appears the president is in no mood to strike a deal with Republicans, preferring to avoid any compromise and attack the GOP.

“[I]t helps his campaign not to have a deal,” Paul said.  “I don't think he cares at all what this will do to people's retirement account on Nov. 23rd. … The president does not care about your retirement account.”

"He cares only about his election, and any deal will not be good for his election.” Said Sen. Paul.

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