An Update on the Debt 'Supercommittee' and Where Things Stand

The 12-member bipartisan joint select "supercommittee" is charged to find at least $1.2 trillion in deficit reduction over the next ten years that both sides can agree on, or risk striking chaos again to the market and political landscape as the debt ceiling crisis did this past summer. The situation seems bleak within the supercommittee, but a bipartisan group of 150 lawmakers, dubbed the "go-big coalition," are behind a push to call on the supercommittee reduce the deficit at least $4 trillion.

A group of 40 lawmakers held news conference in the Capitol Wednesday, claiming to represent 150 in both parties and both chambers, who want the supercommittee to go well beyond its mandate to find $1.2 trillion in deficit savings.  Eight days to the deadline, pressures continue to mount for a bipartisan solution rather than $1.2 trillion in automatic cuts to defense and discretionary domestic spending, which many consider would constitute failure.

Supercommittee members from each party have expressed frustration with one another. The Republican co-chairman of the committee, Texas Rep. Jeb Hensarling, has walked back from statements made on CNBC Tuesday night that Republicans "have gone as far as we feel we can go" in new tax revenues within the latest GOP committee proposal. The GOP supercommittee proposal, which was crafted by Sen. Pat Toomey, raises taxes $250 billion to achieve the minimum $1.2 trillion deficit plan. To achieve that figure about $776 billion would come from spending reductions, including $275 billion from health programs, with another $240 billion in cuts to the federal workforce and $161 billion in savings by changing the formula for Social Security payments.

Democrats consider the offer a lowball "line in the sand," as The Hill reports that Democrats have made their latest offer at $1 trillion in new taxes as part of a $2.3 trillion overall proposal. POLITICO reports that the new revenue will come through closing deductions and overhauling the corporate tax code, while instituting $1 trillion in spending cuts that include $350 billion from Medicare $200 billion out of defense. The AP notes that Democrats are insisting on tax increases of up to $1 trillion in exchange for cost curbs on Medicare and Social Security.

Rep. Hensarling said Wednesday that the GOP offer on taxes wasn't final, and could change once Democrats got serious with offering substantial cost curbs to Medicare and Medicaid.

"I'm waiting for the Democrats to put fundamental reform on the table," Hensarling said.

Adding more flames to the fire, discontent has broken out internally among Republican ranks, with many fiscal hawks expressing skepticism about supporting any proposal which raises revenues. Sen. Jeff Sessions, the ranking Republican on the Senate Budget Committee, told POLITICO Tuesday that raising revenues would be a danger:

“We’re in a national discussion about whether to deal with our deficit through tax increases or spending reductions, and I think the American people demonstrated in the last election they were prepared to take spending reductions. I don’t think we’ve done a very good job of expressing that, frankly.”

Outside of the supercommittee, another proposal on deficit reduction is brewing. The Washington Post reports that a bipartisan group of about 150 lawmakers from both houses have urged the supercommittee to “go big." The “go-big coalition” tells the supercommitte it has significant congressional support for a deal that would cut the deficit by about $4 trillion. The Post reports that the "go-big coalition," which includes House Minority Whip Rep. Steny Hoyer and Sen. Dick Durbin, calls on massive cuts but does not offer specifics on how to reach their $4 trillion deal:

"The coalition wants the supercommittee to know that 'the right thing to do is to go big,' said Sen. Saxby Chambliss (R-Ga.). He said that could mean deficit reduction of $3 trillion to $6 trillion, instead of the minimum requirement of $1.2 trillion that the panel must agree on by a Nov. 23 deadline.

'I’m very proud to stand here with these folks today and say, ‘supercommittee, we got your back,'’  Chambliss said.

Although several members of the coalition repeated that expression of support, they offered no specifics on how to reach a deficit-reduction deal in the range of $4 trillion, providing little more than encouragement from the sidelines as the supercommittee struggles to agree on how to achieve even the $1.2 trillion minimum."

The Hill writes that the call for a bare minimum of $4 trillion in reduction echoes sentiments made by Erskine Bowles, who was a co-chairman of President Obama’s deficit-reduction panel. Lawmakers on that panel had cautioned that anything less than $4 trillion in cuts over the next decade would threaten America’s financial stability.

“The $4 trillion figure, the effort to ‘go big,’ is not just an arbitrary number,” said Republican Sen. Mike Crapo to The Hill.“It’s what we’ve all learned is what we must do as a minimum to achieve the kind of fiscal reform in America that will help keep us the greatest nation and the greatest economy in the world.”

As some conservatives have been hesitant on revenue cuts, liberals in Congress fear supercommittee Democrats may take a huge whack out of cherished entitlement programs. As POLITICO notes making it likely that "Any bipartisan deal would split both parties."

AP writes that more than just deficit-reduction is at stake:

"Democrats are hoping to add elements of President Barack Obama's jobs legislation to any deficit-cutting deal, including extensions of a Social Security payroll tax cut and unemployment benefits that are due to expire at the end of the year. But their proposal to use savings from shrinking war spending is opposed by some Republicans.

A comprehensive rewrite of farm programs may hang in the balance, too, and lawmakers also must pass legislation to ensure sufficient funds to reimburse doctors who treat Medicare patients."

[....]

"Republican leaders still support the concept of swapping modest tax increases for a tax overhaul. And they say that's a good deal, especially since the Bush-era tax cuts expire at the end of next year.

'It's important for us to, in my opinion, reform the tax code,' Boehner said. 'And we've got the highest business tax rate in the world. We've got a personal tax system that's so complicated it costs Americans about $500 billion a year to comply with the current tax code,' he said.

Republican officials say the GOP offer envisions an overhaul that would drop the top tax rate on personal income to 28 percent from the current 35 percent and shave or eliminate some itemized deductions that are commonly used. The top corporate rate would fall also."

The deficit reduction supercommittee deadline is November 23, Thanksgiving eve.