As the Congressional super committee approaches its November 23 deadline to find more than $1 trillion in deficit reductions -- taxes have been a sticking point. Republicans have resisted efforts to raise taxes and Democrats have said a deal must include new tax revenue. Alex Bolton, senior staff writer for The Hill newspaper says there are signs on Capitol Hill that there may be some new flexibility.
The possibility of Republicans agreeing to raise tax revenue
In the last few days, Republicans have floated the possibility of raising up to $500 billion through tax reform. It would entail lowering the income tax rates, limiting the number of tax deductions that people can claim, and eliminating tax breaks for corporations.
The selling point is that Republicans would be more willing to go for it, because the average person would pay a lower tax rate. It would reduce the deficit, because the lowering of the tax rate would not completely offset the restriction on deductions and the tax breaks for corporations.
The problem, from the Democrats perspective, is that it's not enough. During the summer negotiations to raise the debt limit, Democrats say House Speaker John Boehner was willing to agree to $800 billion in new tax revenues, and this falls short. "Democrats aren't happy," says Bolton. "But at least they're saying it's moving in the right direction."
The likelihood of a grand bargain
"That seems less and less likely with each passing day," says Bolton.
The talk over the last couple day is that the negotiators are focusing on a $1.2 trillion deal. The problem is that many members of the Senate and House think that $1.2 trillion is far too little. When you're running a $14 trillion debt and a $1.3 trillion deficit just for this year, it's a drop in the bucket.
Another threat of another shut down
"It's possible, but given that there was a scare over a government shutdown in April, and then there was a scare over a national default in August, and then a threat of another government shutdown in September, there is very little appetite for brinksmanship."
People are focused more on the deficit reduction talks in the super committee and another blowup over appropriations would be seen as unproductive. The expectation is that it will not happen.