At National Review Online, Rich Lowry reports that Democrats on the Joint Select Committee on Deficit Reduction (aka the supercommittee) rejected a potential compromise last night:
I’m hearing that Democrats last night rejected a framework for compromise that would have included significant new revenues. They had sounded amenable to the possible , but their position suddenly hardened after going back to their caucus. It is almost surely an indication that they want to do everything they can to validate President Obama’s line of attack on a “do nothing” Congress. Sen. Pat Toomey had worked out a framework that he considered pro-growth and a reasonable first step toward fiscal restraint, while making a major concession to Democrats on in the interests of getting a deal. Max Baucus especially had sounded open to it and a sub-group of the supercommittee had been discussing it seriously–but no more.
According to multiple sources familiar with the deliberations, Toomey’s framework would have lowered and locked in the top individual rate to 28 percent and lowered other commensurately. It would have (the numbers are rough) offset the revenue loss and raised $250 billion in new revenue by limiting the value of deductions, especially on the high end. It would have gotten another $40 billion with an adjustment to the CPI, moving to “chained indexing.” It would have raised another $110 billion through growth effects of the lower rates and another $100 billion through asset sales and the like. That’s about $500 billion in revenue.
There appear to be two possible outlines of a plan taking shape, one good, one terrible. To attract the GOP Six, the good plan would be built around tax reform, with either income or corporate tax rates (or both) reduced or frozen, while corporate welfare was scraped from the tax code—loopholes, breaks, and special writeoffs, possibly including those Obama has denounced for corporate jet owners and oil companies. Would any Democrats go along? Senators Max Baucus and John Kerry, maybe. And if Senate majority leader Harry Reid blessed the deal, Patty Murray, his surrogate on the panel, probably would. This is Deal A.
Deal B is what might happen should Deal A fall by the wayside. More conventional, it would consist of some formula of tax hikes and spending cuts. Democrats want “balance,” a 50-50 split. Conservatives are worried three Republicans on the supercommittee—House members Dave Camp and Fred Upton and Senator Rob Portman—might accept Deal B as a last resort. Not likely, unless Boehner and McConnell anointed the deal.
The biggest impediment to either deal is President Obama. Deal A clashes with his tax-the-rich, anti-Republican strategy, the centerpiece of his reelection campaign. Obama wants the Bush tax cuts to expire at the end of 2012 and a 5.6 percent surtax to be added for millionaires. The top rate would rise from 35 percent to 45 percent.
Read the whole thing here.