Tuesday’s exchanges came as the co-chairs of a bipartisan deficit-reduction commission called for reducing the deficit by $2.4 trillion over the next 10 years, with much of the savings coming through health care changes, the closing of tax loopholes, a stingier adjustment of Social Security’s cost-of-living increases and other measures.
The proposal by Republican former Sen. Alan Simpson of Wyoming and Democrat Erskine Bowles, the former chief of staff for President Bill Clinton, calls for about one-quarter of the savings to come from changes in health care programs and another quarter from revenue generated by tax changes.
In their plan, Bowles and Simpson say the automatic cuts scheduled for March 1 are too steep and could set back the economy.
“Sharp austerity could have the opposite effect by tempering the still-fragile economic recovery. In order to protect the recovery, the sequester should be avoided and deficit reduction should be phased in gradually,” they wrote.
Obama has proposed about $1.5 trillion in long-term deficit reduction with savings from changes in health care programs, lower cost-of-living adjustments in Social Security and other government benefits, spending cuts and increases in revenue by overhauling the tax system
The White House says any elimination of corporate subsidies or tax breaks would be used to lower rates for corporations to 28 percent and to 25 percent for manufacturers, not to raise revenue.
Under Obama’s plan, additional revenue of about $600 billion over 10 years would mostly come from reducing the value of itemized deductions and other tax preferences to 28 percent for families with incomes over $250,000.
Even as Obama and Republicans battle over the automatic cuts, Congress is also struggling over how to fund the government through the Sept. 30 end of the fiscal year. Every federal agency has been running on autopilot at essentially last year’s funding level since October.