Some Democrats seeking a broad bipartisan deficit deal are eyeing a $700 billion carrot to bring Republicans on board.
Senate Budget Chairman Kent Conrad (D-N.D.) said this week he believes Republicans could be enticed to vote for controversial revenue raisers if Democrats promised to provide permanent relief from the alternative minimum tax — which for years has bedeviled both parties as they’ve watched the tax intended for the wealthy threaten middle-income Americans.
“The alternative minimum tax is in the law now, and we’re going to have to reform it,” he said. “That is going to lose revenue. Replacing that revenue is clearly not a tax increase. And you’re talking, you know, between $600 [billion] and $700 billion right there of revenue that’s not a tax increase. It’s simply replacing revenue that’s already in the code.”
Conrad said nobody expects Congress to simply let the AMT hit the middle class. And Congress typically has prevented that from happening every year without paying for it.
Offsetting AMT relief with revenue elsewhere could help generate the cash needed to reach an overall bipartisan $4 trillion deficit reduction goal, Conrad said.
“That’s a big chunk of the $1.1 trillion [of revenue] we need,” he said, adding that he’s talked to a number of Republicans who believe the AMT could provide a pathway to a deal.
Conrad is a member of the original “gang of six” Senators seeking a big bipartisan budget deal, and the group has continued to meet without Sen. Tom Coburn (R-Okla.), who announced last month that he was taking a sabbatical from the group.
Since Coburn’s departure, Democrats have stepped up their efforts to recruit other GOP Members to join the group and have urged the remaining Republicans — Sens. Mike Crapo (Idaho) and Saxby Chambliss (Ga.) — to finalize a deal and present it to the Senate even without Coburn on board. That push gained urgency after the bipartisan debt limit talks led by Vice President Joseph Biden collapsed last week.
“I think we ought to come forward with what we’ve done and use it as guidance or a template of where we might go, but they’ve got to come to that same conclusion,” Senate Majority Whip Dick Durbin (D-Ill.), another member of the gang, said last week.
One GOP source said some Republicans are intrigued by the AMT idea, although it’s much easier to reach a deal that can be sold to Republicans as revenue neutral than one that includes significant revenue that exceeds the AMT fix.
Conrad also said he’s pushing to eliminate offshore tax havens that he said allow companies to effectively cheat on their taxes.
Republicans are also struggling with whether it would help or hurt the ultimate prospects for a bipartisan plan if a broad group of Senators announced a deal without a sign-off from House Republicans — or the White House.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.