–Senate Finance Chief Baucus Offers $3T Deficit Cut Plan; GOP: Nyet
–Congressional Republicans Prepare Offer With $1.5T in Spending Cuts
–Unclear If Panel Deficit Panel is Bracing For Fight, Looking For Deal

By John Shaw

WASHINGTON (MNI) – After two months largely spent circling around
each other, Democrats and Republicans on Congress’s deficit reduction
panel now appear ready to engage on tough fiscal issues.

But it still remains to be seen if the Democrats and Republicans
are bracing for a fiscal brawl or are beginning to probe for a
bipartisan agreement.

This week Senate Finance Committee Chairman Max Baucus floated a
plan that calls for about $3 trillion in deficit reduction over a decade
with a nearly equal blend of spending cuts and tax increases.

Among other things, Baucus’s plan calls for about $1.3 trillion in
new revenues, $575 billion in health care entitlement savings, $400
billion in discretionary savings and about $250 billion in other
entitlement savings.

Baucus’s proposal has elicited no enthusiasm or interest from
Republicans on the panel who insist that the deficit reduction package
be largely, if not exclusively, devoted to spending cuts.

Republicans on the panel have prepared a counteroffer with about
$1.5 trillion in spending cuts and about $600 billion in new revenues.
The new revenues come largely through the increase in some fees and an
assumption that tax reform would generate about $200 billion in new
revenues.

Both Democratic and Republicans plans are essentially refinements
of party positions that were developed in budget talks this year between
President Obama and House Speaker John Boehner and in later budget talks
conducted by Vice President Joe Biden.

Congress’s Joint Select Committee on Deficit Reduction is charged
to submit a report to Congress by Nov. 23, 2011 that reduces the deficit
by between $1.2 trillion and $1.5 trillion for the 2012 and 2021 period.

The final package, if one is agreed to by the majority of the
panel’s 12 members, must be voted on without amendment by the House and
Senate by Dec. 23, 2011.

If the panel fails to agree on a spending cut package or Congress
rejects its plan, a budget enforcement trigger would secure $1.2
trillion in budget savings through across-the-board cuts.

The cuts would be equally divided between defense and non-defense
programs but would exempt Social Security, Medicaid and low-income
programs.

The deficit reduction panel has now held four public hearings so
far: its organizational meeting on Sept. 8; a budget overview hearing on
Sept. 13 with Elmendorf; a revenue overview on Sept. 22 with Thomas
Barthold, the chief of staff of Congress’s Joint Tax Committee; and a
second session with Elmendorf Wednesday.

The panel will hold a hearing next Tuesday with leaders of earlier
deficit reduction efforts: Erskine Bowles and Alan Simpson and Pete
Domenici and Alice Rivlin.

The deficit reduction committee received a private briefing last
week from the members of a bipartisan group of senators who have
developed a $4 trillion deficit reduction plan that leaves many
specific savings to be identified later.

The 12-person panel has been meeting several times a week in often
lengthy private sessions. Members have left those sessions tight-lipped,
saying nothing that might provide a hint about where the panel is
headed.

Several Republican members of the panel have said the panel should
focus on achieving the $1.5 trillion deficit cutting goal.

Some lawmakers and outside groups have urged the panel to come up
with a $4 trillion deficit reduction plan over 10 years. Sen. John
Kerry, a Democratic member of the panel, repeated this plea in
Wednesday’s public session with Elmendorf.

** Market News International Washington Bureau: 202-371-2121 **

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