The November 23 deadline for Congress’s deficit reduction “supercommittee” is only about a week away and effectively a few days less.
The 12-member bipartisan, bicameral joint committee has been charged with producing a deficit reduction plan that would whack at least $1.2 trillion to $1.5 trillion off the federal government’s balance sheet over the next 10 years. If the evenly divided committee of six Democrats and six Republicans fails to agree on a plan, which appears increasingly likely, that would trigger automatic spending cuts of about $1.2 trillion in defense and non-defense programs, including entitlements. While the official deadline is November 23, the timeline is even tighter because the numbers for any possible deal need to be crunched by the analysts at the Congressional Budget Office before it passes muster.
Alliantgroup national managing director Dean Zerbe, who was formerly tax counsel and senior counsel at the Senate Finance Committee, said he is cynical about the prospects for a deal within the supercommittee on tax reform. Instead, the tax issues are likely to get bounced to the traditional tax-writing committees in Congress, the Senate Finance Committee and the House Ways and Means Committee.
“They’re finally getting into nut-crunching time,” he said. “There’s this return to the idea of let’s set up a process or a mechanism by which the committees can consider tax separately. It’s clear to me that [Ways and Means] Chairman [Dave] Camp in particular has no interest in doing something significant on tax within the supercommittee. I think that’s one of the reasons why he put out his proposal on international [taxation], which I thought was very thoughtful. It clearly gives a blueprint of what the future will be. I think part of it was also to signal that, hey, we can and will look at doing tax reform through the regular committees and not through the supercommittee, so now they’re seeing if they can set up formulas for in a sense bracketing the two committees, Finance and Ways and Means, to do tax reform on kind of an expedited basis.”
Zerbe is cynical about a deal being reached in time, but he sees some prospect for a solution if the committees turn to some of their longtime staff members, like one of his former colleagues at the Finance Committee, Mark Prater, who has been picked as staff director of the supercommittee. Prater has helped resolve thorny tax legislation problems in the past, as with the Bush tax cuts.
“He can put together major legislation to make the whole train go,” said Zerbe. “That would be on the side of optimism, if the members turn to him and say we need to do something. He’s very good at listening to members’ priorities. He understands that on both sides of the aisle you need to get broad acceptance and a framework that can work. He can do a lot to make it happen. It’s just a question of whether they will fully utilize his talents.”
For now, though, the Republican chair of the supercommittee, Rep. Jeb Hensarling of Texas, and the Democratic chair, Sen. Patty Murray of Washington, remain far apart. On Tuesday, Speaker of the House John Boehner, R-Ohio, endorsed a plan advanced by Republicans on the supercommittee to raise $300 billion in additional tax revenue while cutting the top tax rate from 35 to 28 percent and eliminating or limiting many tax deductions. Democrats want to see more balance between tax increases and spending cuts in the proposals, but Hensarling said Tuesday evening that Republican negotiators felt they “have gone as far as we feel we can go,” according to the Associated Press. Murray said Republicans still needed to “come to us with a credible offer with real revenue,” but Senate Minority Leader Mitch McConnell, R-Ken., said that Republicans had yet to see a counter-proposal from the Democrats.
Zerbe noted that the two chairmen of the tax-writing committees, Rep. Dave Camp, R-Mich., and Sen. Max Baucus, D-Mont., would need to get wide support among their colleagues if the supercommittee just comes back to them with a broad number and guidance on the tax proposals before Congress could have an up or down vote.
“It’s kind of like a reconciliation on steroids,” he said. “There are no amendments. It’s expedited debate. It will be incumbent on the two chairmen to garner broad support and get folks on both sides to something that’s ultimately agreeable. It’s doable and possible. I just wonder, during a Presidential election year, it’s no walk in the park.”
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