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The second, much larger slice of revenue would come from changing the tax code. Under the Democrats' plan, the joint committee would instruct the House Ways and Means and Senate Finance committees — chaired by deficit panel members Rep. Dave Camp (R-Mich.) and Sen. Max Baucus (D-Mont.) — to find an additional $1 trillion in savings by overhauling the tax code.
The Republican plan also includes $40 billion in revenue raisers from a chained CPI. Most of its other revenue claims, however, come not from tax changes but from bringing billions of dollars back to the government through Medicare cuts, other mandatory savings such as cuts to agriculture subsidies and spectrum sales, as well as dynamic scoring.
The Bowles-Simpson Commission report recommended about $1.2 trillion in revenues through reduced deductions and rates, with an approximate 3-to-1 ratio in spending cuts to revenue increases. The Rivlin-Domenici plan suggested a mix of 60 percent cuts to 40 percent revenues resulting in nearly $6 trillion of savings over nine years.
Democrats could use today's hearing to prove that the difference in the parties' approaches to raising revenue is more than just semantic. Republicans could use it to push harder for deeper entitlement cuts. The witnesses might represent how far the panel could get through compromise.
In a late September op-ed in the Washington Post, Bowles and Simpson called on the panel to come up with a plan that achieved savings above and beyond the minimum $1.2 trillion required by the Budget Control Act.
"We believe that going big could actually improve the chances of success, in terms of the politics and the economics of debt reduction," they wrote. "We have called for at least $4 trillion in savings because it is the minimum amount of deficit reduction necessary to stabilize the U.S. debt and put it on a downward path as a percentage of gross domestic product."comments powered by Disqus