Democrats and Republicans Tuesday outlined their respective proposals to reduce the nations’ $1.3 trillion deficit and so far their plans clash significantly when it comes to how deeply to cut spending and whether to raise taxes. For the second day in a row, GOP leaders declared that any new tax increases are “off the table” in the budget talks now under way between the White House and Congress.
“We’re not going to raise taxes,” said Senate Minority Leader Mitch McConnell, R-Ky. “That was decided in last November’s election. I think the American people pretty clearly believe that we have the deficit problem because we spend too much, not because we tax too little.”
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Democrats, conversely, said Tuesday there is no way an agreement on the budget can be reached without a balance of cuts and new revenue that would come with a tax increase.
“It can’t all be done by cutting domestic discretionary spending,” Senate Majority Leader Harry Reid, D-Nev., said after meeting with the Democratic caucus. “It has to be a fair approach to … balancing the budget. We have to do something with domestic discretionary, we have to do something on defense and of course we have to do a better job with taxes.”
A bipartisan group of House and Senate lawmakers met for the second time Tuesday with Vice President Joe Biden, who is leading the talks.
The group aims to reach a deal that cuts enough spending to satisfy Republicans and win their vote to increase the nation’s $14.3 trillion debt ceiling while maintaining the support of cut-wary Democrats. The debt ceiling sets the nation’s borrowing authority. Congress has until Aug. 2 before that limit is reached. Treasury Secretary Tim Geithner has signaled he wants Congress to raise the ceiling by $2 trillion, which will extend the limit through the 2012 elections.
House Speaker John Boehner, R-Ohio, said on Monday that in order to win GOP support, cuts would have to exceed the debt limit increase. Both parties have agreed that over the next 10 years, the deficit should be reduced by about $4 trillion, a target first proposed by President Obama’s bipartisan deficit commission.
Lawmakers in both parties Tuesday rolled out opposing proposals to reach that goal. Their plans reveal differences among themselves as well as across party lines.
Senate Budget Committee Chairman Kent Conrad, D-N.D., proposed a measure to the Democratic caucus that would use a 50-50 mix of taxes and spending cuts to trim the deficit.
On the Republican side, Sen. Pat Toomey of Pennsylvania proposed a budget that excluded any tax increases and drastically slashed spending, balancing the budget by 2020.
Toomey’s plan would lower the corporate tax rate from 35 percent to 25 percent, but it leaves Medicare untouched, which puts it at odds with the plan introduced by House Budget Committee Chairman Paul Ryan, R-Wis., whose own proposal would raise Medicare’s eligibility age in order to reduce its cost.
House Majority Leader Eric Cantor, R-Va., told reporters that spending reductions in Medicare remain under consideration.
