Next week is the deadline for the Joint Select Committee on Deficit Reduction to come up with a plan to reduce the federal deficit by $1.2 trillion over the next ten years. After a week or two of hopeful momentum on reaching a deal, including proposals from the two parties that only differ by $100 billion on taxes, negotiations have stalled once again. Formal legislation must be introduced by November 21st and voted on by November 23rd.
The main points of contention between the Republicans and Democrats on the committee are changes to Medicare and tax revenue increases. Last week Democrats said they would be willing to go as low as $401 billion in new revenue, while Republicans indicated the highest they were willing to go up to is about $300 billion. They differ on the types of tax reform that would generate this revenue. This week we are hearing more bickering than negotiation, more blame game than end game.
While it is unclear whether the committee will be able to reach a deal in time, all hope is not lost. It certainly wouldn’t be the first deal struck at the last possible minute this year—the very Budget Control Act that created this “Supercommittee” and raised the deficit ceiling was passed just hours before the U.S. government would have defaulted on its borrowing authority. Congress also narrowly avoided a government shutdown back in April when they couldn’t agree on how to fund the remainder of Fiscal Year 2011.