Budget wranglers find 'entitlement cuts' and 'tax hikes' still dirty words

To solve America's rising debt crisis, would Republicans in Congress ever agree to reform the tax code in a way that boosts federal revenues (aka a tax increase)? Would Democrats ever concede changes to Social Security?

"No new taxes" and Social Security – the biggest political sacred cows of the two parties – loom large as a bipartisan group of six senators grapples behind closed doors to shrink the US budget deficit and relieve the debt burden. Rumors and press leaks of such tradeoffs in their plan have proved to be so toxic that the senators closest to the negotiations agreed this week to decline all comment on their progress. News reports of a potential deal last month nearly derailed further talks, as Republicans took flak from Republicans and Democrats turned against Democrats.

Meanwhile, leaders of the two parties and the White House did manage to come together this week to avert a government shutdown – at least for now. The House and the Senate agreed to cut $4 billion in spending this fiscal year and to extend until March 18 funding for the government. The House has voted for $61 billion in cuts to discretionary spending through Sept. 30 (end of the fiscal year), but the Democratic-controlled Senate shows little enthusiasm for that path. Both sides in effect bought themselves some time to come to agreement on the level of cuts for this year.

The tougher work, though, is what to do in fiscal year 2012 and beyond. Deficit spending will total $20 trillion over the next five years, according to the president's budget plan.

“To avoid passing on massive debt to future generations, our structural deficit must be addressed,” said David Walker, former Comptroller General and a founder of No Labels, a bipartisan group that sponsored a rally at the Capitol on Tuesday to urge that Congress put “everything on the table” in the budget talks.

That work is being taken up by the six senators, four of whom served on President Obama's National Commission on Fiscal Responsibility and Reform. They are using the commission's report, released in December, as a starting place for budget negotiations. It called for reducing deficits by $3.9 trillion over the next decade by cutting spending and entitlements and raising taxes, including ending popular income-tax deductions. "None of us likes every element of our plan, and each of us had to tolerate provisions we previously or presently oppose in order to reach a principled compromise," the report concluded.

Republicans and the tax pledge

One piece of the commission plan that fiscal conservatives most definitely do not like is a proposed reform of the US tax code. Under the commission's blueprint, reform would raise $785 billion in new tax revenues by 2020. Suspicions that the six senators – the so-called Gang of Six – are contemplating something similar has prompted Grover Norquist, president of the antitax Americans for Tax Reform, to fire off a letter to the three Republicans of the "gang": Sens. Tom Coburn of Oklahoma, Saxby Chambliss of Georgia, and Mike Crapo of Idaho. In it, Mr. Norquist charged that any move to support revenue increases would violate the ATR's Taxpayer Protection Pledge, which each has signed.

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