Super Committee Supercollides Over Taxes for Rich

We are just one week away from when the Super Committee needs to deliver a deficit-reduction proposal to the Congressional Budget Office and the group is stuck on -- you guessed it -- the question of whether or not to remove tax loopholes for the richest Americans. Does this feel like déjà vu?

The 12-member Super Committee of Congressional and Senate leaders was formed as a compromise when budget negotiations went south last summer. The Committee was tasked with finding $1.2 trillion in savings by Thanksgiving or an automatic provision would kick in reducing Medicare by $600 billion and defense by the same amount -- a stinger to both sides of the aisle. To make the November 23rd deadline the Committee has to deliver its proposal to the CBO to "run numbers" two weeks ahead of time -- i.e. in the next few days. But just like last summer, both sides remain in a heated debate, which is looking more and more like class warfare.

Thus far, the Committee has been largely secretive about negotiations. What we do know comes from leaks and this week's first public hearings: Democrats have proposed $3 trillion in savings; Republicans have proposed $2.2 trillion. In Erskine Bowles' (co-author of the Simpson-Bowles plan) speech to the Committee this week encouraging both sides to embrace their common ground, some specifics emerged, including that both plans propose:

  • $600 billion in Medicare savings (in part by raising the eligibility age from 65 to 67)

  • $300 billion in cuts to other entitlements (not specified further)
  • $200 billion in savings by lowering cost-of-living increases (CPI) for pensioners and Social Security recipients.
  • $900 billion cap on discretionary spending for the next decade, agreed to in August. Democrats are upping the ante proposing another 400 billion in cuts; Republicans propose just under $50 billion.
  • What, then, accounts for the $800 billion difference between what the Democrats are offering and what the Republicans are willing to accept? You guessed it -- taxes.

    Over the summer, House Speaker John Boehner and Majority Leader Eric Cantor were invited to the White House to meet with President Obama and Secretary of the Treasury Tim Geithner to hear their plan to close tax loopholes and restructure the tax code. If implemented, the effort could find $800 billion in savings. It was nicknamed "the grand bargain."

    Back then it wasn't something Boehner could sell to his Tea Party caucus. But given the political backlash his members felt then and some repackaging now, he's hoping he can sell it. The idea is to present this to his folks as a "tax restructuring" rather than a tax increase. That way, a Republican who had signed the Grover-Norquist-no-new-taxes pledge (including himself) could keep their promise.

    Enter Grover Norquist. According to Talking Points Memo, "The well-funded anti-tax crusader has secured pledges from the vast majority of Republican members of Congress, including all six GOP members of the Super Committee, to never raise taxes." As such, Norquist is doing everything in his power to stop Republicans from folding on this issue.

    What is likely to be at issue are two main points.

    First, Democrats want $200 billion in tax revenue increases upfront, which, they say, could be achieved in some significant part by eliminating deductions that benefit the wealthiest Americans -- corporate jets, race horses and carried interest. Second, Democrats want a firm commitment to end (once and for all) the Bush Tax Cuts of 2001, which are up for renewal next year. Republicans (read Grover Norquist) are not amenable to either.

    In recent days, a gaggle of Republicans have tried to talk some sense into their Republican brothers. Former Wyoming Senator Alan Simpson, Georgia Senator Saxby Chambliss and former New Hampshire Senator Judd Gregg, have all made presentations to the Committee arguing that the Republicans are nuts to walk away from a deal in which the Democrats are willing to cut treasured programs like Social Security and Medicare. Simpson even took a personal poke at Norquist saying, "If Grover Norquist is now the most powerful man in America, he should run for president," Mr. Simpson said. "There's no question about his power. And let me tell you, he has people in thrall. That's a terrible phrase. Lincoln used it. It means your mind has been captured. You're in bondage with your soul."

    But, Mr. Simpson, that's just where the Republicans are -- in bondage to Grover Norquist and to all those monied interests who want to keep their tax credits for corporate jets and their low tax rates courtesy of George Bush. It's greed -- plain and simple -- and at the hand of that greed the rest of America will suffer.

    It's time for Republican themselves -- at the call of their elders this week - to stand up to the bullies and the tea-partiers and harken back to the wisdom of old. You can't get what you can't pay for -- even if you are rich.