Debt supercommittee agreement still far off as members assign blame
But the $300 billion GOP tax offer was predicated on a fundamental tax overhaul and extension of Bush-era tax cuts set to expire at the end of next year. The Democratic offer would cut off unspecified tax breaks and keep in place current law in which the tax cuts expire, an idea that is anathema to Republicans.
"This particular conversation was a step backwards because it would lock in the largest tax hike in history ... and then add an additional $400 billion in job-killing tax hikes without pro-growth tax reform, plus more than $300 billion in 'stimulus' spending," said Michael Steel, spokesman for House Speaker John Boehner, R-Ohio.
If the supercommittee fails to reach a $1.2 trillion deficit-cutting deal by Wednesday, automatic spending cuts totaling that amount would take effect beginning in 2013. That's a result that lawmakers on both sides of the political divide — particularly defense hawks — say they oppose.
Talks turn rocky
The talks turned particularly rocky last week, when Sen. Pat Toomey, R-Pa., presented an offer to several Democrats that envisioned raising almost $300 billion in additional revenue through an overhaul of the tax code that also lowered the top individual tax rate from 35 percent to 28 percent. It would cut the corporate rate as well.
Republicans pointed to the offer as a possible turning point, given the party's long record of opposition to higher taxes.
But Democrats attacked it as a tax cut for the rich in disguise, and the talks seemed to lose momentum.
The secret Democratic counterproposal came from Sen. Patty Murray, D-Wash., according to Democrats, in a meeting Friday with Hensarling.
In it, Democrats suggested raising $400 billion in additional revenue through eliminating tax breaks by means of an overhaul of the IRS code and cutting $876 billion in spending.
Dems move to eliminate tax breaks
Unlike Republicans, who wanted to lock in lower tax rates as part of a plan to raise $250 billion, Democrats said they would find the additional revenue by eliminating loopholes and other existing tax breaks. They also said they would not extend the Bush-era tax breaks due to expire at the end of 2012.
They omitted other parts of the GOP offer, including a proposal to raise the age of Medicare eligibility from 65 to 67 and a different proposal to slow the rise of annual cost-of-living increases under Social Security.
In their offer, Democrats said, Republicans had recommended using the war money, targeting $690 billion to offset the impact of the alternative minimum tax and $19 billion for a short-term extension of Medicare physician payments.
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