Tax, spending cut wish lists prepared as deficit reduction committee begins work

While some await Obama's jobs speech tonight and others are counting down the hours until the 2011 NFL season kicks off (count me in both groups), the special bipartisan Congressional committee charged with reducing the federal deficit quietly began its work.

Today's meeting was basically an organizational get together for the Joint Select Committee on Deficit Reduction. The 12 panel members, six Democrats and six Republicans from the House and Senate, will return Tuesday, Sept. 13, to get down to their real job: finding up to $1.5 trillion to in deficit reduction.

Although protesters greeted the so-called Super Congress' inaugural meeting, co-chairs, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas) opened the session with bipartisan hopefulness.

"We must all be open to compromise," said Murray, who also noted that she was encouraged that the panel's members had not publicly drawn lines in the sand.

"I do not believe this committee alone will solve the nation's debt crisis," said Hensarling. "But a bipartisan negotiated reduction in the growth of our nation's debt would be a wonderful, needed, hopeful step in the right direction."

Outside ideas from the Democrats: Others members of Congress who aren't part of the official deficit reduction group, however, are trying to get their favorite fiscal ideas heard.

House Democrats are looking at a variety of revenue-raising proposals, i.e., taxes, they'd like the Super Congress to consider. While there's been a widely publicized list of costly tax breaks, Tax Analysts reported some new revenue ideas being floated, including:

• Allowing the federal government to reclaim passports of individuals with more than $100,000 in back taxes,
• Establishing a 5.4 percent surcharge on upper-income earners,
• Extending estate taxes at 2009 levels,
• Allowing the expiration of the 2001 and 2003 tax cuts for upper-income earners,
• Altering the depreciation schedule for corporate jets and
• Treating some income as ordinary income instead of capital gains.

Medicare revisions also are part of the Democratic package. Suggested changes include freezing pay for some providers and reducing drug costs for people who are also eligible for Medicaid. There's also a proposal to raise the Medicare eligibility age from 65 to 67.

"Members have not discussed these documents," a House Ways and Means Committee aide told Tax Analysts. "Staff has prepared for review multiple revenue provisions that may come under consideration for a balanced approach to job creation, tax reform, and deficit reduction, as well as an analysis of changes to entitlement programs that have been proposed by others during previous negotiations this year."

Outside ideas from the Republicans: Across the aisle, Republicans have their own pet proposals to not only reduce the deficit, but stimulate economic growth.

"We also are going to be putting out there, along with the discussion of comprehensive tax reform, some of the things we can do right now," said House Majority Leader Eric Cantor (R-Va.). "We have a small business tax cut that will go right to the bottom line to help employers with 500 employees or less achieve a better outcome if they hire more people, if they grow. It is essentially a 20 percent tax reduction for small businesses."

And the House leader who in the past has gone toe-to-toe with the White House indicated his support for one Democratic proposal, the extension of the payroll tax holiday.

"The payroll tax holiday is something that I have supported in the past," Cantor said. "This will be part of the discussions ongoing."

Super committee set-up: For all you tax geeks and policy wonks, check out these announcements regarding the deficit reduction committee:

• Co-chair Murray's opening statement
• Co-chair Hensarling's opening statement
• Mark Prater named committee staff director
• Sarah Kuehl named committee deputy staff director
• Committee rules

Currently, Murray and Hensarling are separately posting their joint deficit reduction panel announcements, but a dedicated website for the special committee is expected.

Let the deficit games begin!

You also might find these items of interest:

• Voters favor combination of taxes, spending cuts to trim deficit
• Super Congress preparatory groundwork
• The political spending chasm