Super-committee co-chairman Rep. Jeb Hensarling (R-Texas) talks about… (J. Scott Applewhite / Associated…)
Top conservatives are suggesting that super-committee Republicans are considering raising revenue by doing away with certain tax loopholes and personal deductions in exchange for keeping individual tax rates at or below the levels enacted during the President George W. Bush era.
A GOP congressional aide said such proposals are in the realm of possibility as Republicans continue discussing options for meeting the committee’s Thanksgiving deadline of slashing $1.5 trillion from federal deficits over the decade.
Conservative leaders have begun to bless the new approach.
“Republicans wouldn’t be agreeing to tax rate increases,” wrote Fred Barnes in the Weekly Standard. “Rate increases are economically harmful. Getting rid of loopholes and special breaks usually isn’t.”
But anti-tax activist Grover Norquist, whose Americans for Tax Reform has secured pledges from lawmakers not to raise taxes, immediately shot down the concept of raising revenues by limiting deductions.
“Supercommittee idiot idea: raise revenue by capping tax exemptions,” Norquist said in a tweet Tuesday.
Republicans have been meeting behind closed doors for days as they attempt to find a way to offer revenues without raising taxes.
Most Republicans in Congress have signed an anti-tax pledge with Norquist’s group, and GOP leaders have resisted new taxes that Democrats insist are needed in exchange for cuts to Medicare and other entitlement programs.
The Bush-era tax rates are set to expire in December 2012 and President Obama has wanted to allow rates on upper-income households to rise to the level they were during the Clinton administration. That would slash $800 billion off deficits over the decade -- half the super committee’s goal.
But Republicans have fought to continue the Bush-era rates -- or even lower brackets further -- and would swap closing loopholes to do so. Republicans have long wanted to revamp the tax code, and they believe this approach would generate revenue by broadening the tax base and through economic growth.
Democrats dismissed the emerging tax proposals as not serious, and part of a series of revenue options Republicans are considering. Republicans previously proposed raising revenue by selling government assets and other measures.
Democrats have proposed a nearly $3-trillion deficit reduction package that would cut Medicare and other entitlement programs but only in exchange for as much as $1 trillion in new tax revenue, largely by targeting wealthier households.
Republicans have dismissed that level of tax revenue as a non-starter.
Failure by the super committee to emerge with a proposal would trigger mandatory spending cuts to defense and domestic accounts that both sides hope to avoid.
But because those cuts do not take effect until January 2013, many in Congress doubt they will come to pass. In fact, top defense hawks are trying to undo the mandatory defense cuts, saying they would harm the military.