Dems present offer to cut deficit by $2 trillion

WASHINGTON -- Democrats on Congress' supercommittee secretly presented Republicans with a revised deficit-cutting proposal earlier this week that calls for a blend of $1 trillion in spending cuts and $1 trillion in higher tax revenue over the next decade, officials in both parties said Wednesday night, adding that compromise talks remain alive though troubled.

The previously undisclosed offer scaled back an earlier Democratic demand for $1.3 trillion in higher taxes, a concession to Republicans. At the same time it jettisoned a plan to slow the growth in future cost-of-living increases in Social Security benefits, a provision liberal Democrats oppose.

The one-page proposal was handed to Republicans at a meeting Monday night attended by some but not all members of the supercommittee. At the same session, GOP lawmakers in attendance advanced a revised proposal of their own that signaled for the first time they would be willing to accept higher revenue as part of a plan to cut deficits over the next decade.

Given the unusual secrecy of the meeting and the committee's Nov. 23 deadline to produce at least $1.2 trillion in savings, it appeared that the pace of activity on the panel was accelerating. Less clear was whether there was still time to bridge enormous differences on priorities, or whether each side was laying the groundwork for trying to blame the other in case gridlock triumphs.

The committee, comprising six Republicans and six Democrats, has been working for weeks. Evidence of progress has been scarce, with Republicans demanding large cuts in benefit programs such as Social Security and Medicare, while Democrats pressed for additional tax revenue as a condition for agreeing to make deep spending cuts.

Few details are known of the session Monday night, except that Sen. Pat Toomey, R-Pa., outlined a plan on behalf of the four Republicans in attendance, and Sen. Max Baucus, D-Mont., countered with the revisions in an earlier Democratic proposal.

One official said the meeting lasted several hours.

Any progress that may have been made by the panel has largely been overshadowed in the past two days by a Democratic campaign to dismiss the GOP proposal as a prescription for deep tax cuts for the wealthy at the expense of the middle class.

In a sign of the political struggle unfolding, Democrats circulated a four-page analysis that relied not on a review of what Toomey outlined, but on what they described as a different, similarly drawn proposal.

Republicans countered that for all the rhetoric, both sides had shown flexibility on the issues that long have been at the root of Congress' inability to compromise on sweeping plans to cut deficits.

"Republicans have put revenues on the table. Democrats have put entitlements on the table," said Sen. Lamar Alexander, R-Tenn. "They both need to put more of each on the table."

Alexander said the so-called supercommittee could expect help from a bloc of 45 senators that have signed on to a letter pledging support for a deficit bargain that mixes new revenues with curbs on the growth of government benefits programs.

Democrats sounded far less upbeat.

"I have yet to see a real, credible plan that raises revenue in a significant way to bring us to a fair, balanced proposal," said Sen. Patty Murray, D-Wash., the co-chair of the 12-member supercommittee.

In something of a dissent, the No. 2 Senate Democratic leader, Richard Durbin of Illinois, said he considered this week's GOP offer "an honest effort" and "a breakthrough that can lead to an agreement. That's what we need."

Asked why he considered it to be a breakthrough, he told reporters, "The word `revenue.' It is a breakthrough."

Durbin said the bipartisan group of 45 senators planned to release a statement later Wednesday urging the supercommittee to keep working toward a target in the $4 trillion range, well above its mandated savings target of $1.2 trillion to $1.5 trillion.

In response, a spokesman for House Speaker John Boehner dismissed what Democrats had presented earlier in the week. "Right now, we are waiting for a response to what the second-ranking Democratic Leader in the Senate called `a breakthrough' - and we've seen nothing," said Michael Steel.

The revised Democratic plan totaled $2.3 trillion in savings over the next decade, including projected savings in interest costs the government would realize from lower deficits, higher than the GOP $1.6 trillion blueprint.

Democrats proposed spending on Medicare would be restrained by $350 billion over a decade, and on Medicaid, by $50 billion.

Another $200 billion would come from defense, and an identical amount from a broad swath of government programs ranging from the parks to transportation.

Democrats also called for an overhaul of the tax code that would result in an individual rate of no higher than 35 percent and a scaling back of itemized deductions.

Republicans, too, favor tax reform. In his presentation, Toomey called for a top rate of 28 percent, which appears to require deeper cutbacks in the existing deductions than Democrats favor in order to yield $250 billion in higher revenue.

Aides in both parties requested anonymity to describe the GOP proposal, and they differed on some of the details.

Broadly speaking, however, the GOP plan would raise new revenues of at least $500 billion, both skimmed off the top as Congress completes an overhaul of the tax code and from proposals such as auctioning broadcast spectrum, raising Medicare premiums and increasing aviation security fees.

The plan also would cut spending by about $700 billion, mixing a less generous cost-of-living adjustment for Social Security beneficiaries with further cuts to agency operating budgets and curbs on the booming growth of Medicare and the Medicaid health care program for the poor and disabled.

Lower interest payments on the national debt would provide the remaining savings.