Clarke Dryden Camper is Senior Vice President, Head of Government Affairs and Public Advocacy at NYSE Euronext, a...
Less than 10 days before its statutory deadline of November 23, the congressional supercommittee has opened the door to postponing major decisions about taxes and entitlements and reconfiguring the $1.2 trillion in automatic cuts scheduled to take place in the event no deal is reached.
On Sunday, supercommittee co-chair Rep. Jeb Hensarling outlined a “two-step process” that would push back major action on overhauling the tax code and reforming entitlements until 2012, setting up an epic election year battle. Meanwhile, Senator Pat Toomey, another supercommittee member, predicted it’s “very likely that Congress would reconsider the configuration of the sequestration.” Republicans believe the current sequestration arrangement falls too heavily on defense spending, while Democrats fear it would damage domestic spending programs.
Last week, Republicans offered to accept $500 billion in new revenue from closing tax loopholes in exchange for fundamental tax and entitlement reform. Under the plan, the top rate would be lowered from 34 percent to 28 percent, while capital gains and dividends would remain at current preferential rates.
While many insiders saw this as the first step toward a possible compromise, the plan is already under heavy attack from both the left and the right. The liberal Center on Budget and Policy Priorities said the plan “would raise after-tax income at the top of the income scale while imposing hardship on millions of less-affluent Americans.” On the right, Michael Tanner of the conservative Cato Institute expressed concern that Republicans “appear to be caving” by putting revenue increases on the table and Tea Party-affiliated Americans for Prosperity said voting for any tax increase “would be disastrous for Republicans.”
Perhaps the only thing both sides agree on at this point is that a lot more work needs to be done to reach consensus on a package that can not only make it out of the supercommittee, but survive an up-or-down vote in the Republican House and Democratic Senate.