WASHINGTON — Top supercommittee Democrats have proposed a “grand bargain”-like offer to their Republican colleagues on the panel, picking up where negotiations between President Barack Obama and House Speaker John Boehner broke off this summer over a $3 trillion package of spending cuts and new taxes.
The proposal was intended as a gesture of compromise as the committee struggles to find common ground to slash deficits by cutting spending, raising taxes or both by its Thanksgiving deadline. Summer talks broke down over Republican resistance to new taxes.
Failure of the supercommittee to reach a compromise is increasingly drawing concern from forces outside Washington that are worried about another downgrade of the nation’s once-stellar credit rating. Standard & Poor’s issued a downgrade after the summer debt-ceiling deal. Another downgrade would likely spike interest rates for ordinary Americans.
The Democratic proposal was not aired publicly, but sources indicated it would combine spending cuts and new tax revenue as had been discussed this summer. Those earlier talks included changes to the way Medicare’s cost-of living adjustments are made that would result in cuts to beneficiaries. Such changes could also generate new revenue.
Democrats have been intent on putting cuts to Medicare entitlements on the table if Republicans are willing to agree to some new taxes. But so far, Republicans have resisted new taxes. Instead, Republicans, led by Rep. Dave Camp of Michigan, have pushed for an overhaul of the corporate tax code that would lower tax rates in a way they believe would spur economic growth and generate higher tax revenue.
Senior citizens’ advocates pounced on the proposal and said if Democrats intended to send up a trial balloon, it was bound to pop among voters.
“I don’t think it’s going to float very well,” said Eric Kingston, co-chairman of the Strengthen Social Security Coalition.
But the influential Business Round table urged the supercommittee Wednesday to find consensus.
“A successful outcome to this process is critical for future economic growth, job creation and American global competitiveness,” wrote John Engler, the organization’s president.
Meanwhile, House Budget Committee Chairman Paul Ryan accused Obama of attempting to exploit resentment of the wealthy in promoting his stalled economic agenda, prompting an administration response that criticized the Wisconsin Republican.
Ryan said that Obama, in his weeks-long campaign for his jobs plan, is “sowing social unrest and class resentment” and “pitting one group against another.”
“Instead of appealing to the hope and optimism that were the hallmarks of his first campaign, he has launched his second campaign by preying on the emotions of fear, envy and resentment,” Ryan said in a speech Wednesday at the Heritage Foundation in Washington.
Obama has mounted a populist-style campaign for his $447 billion jobs agenda, which he outlined in September and would be financed with a new surtax on millionaires.
“We should all pay our fair share in taxes,” Obama said earlier this month. “That’s not class warfare - that’s not an attack on anybody. That’s just common sense. That’s just fairness.”
Republicans have thwarted the Obama plan from advancing in Congress.
White House spokesman Jay Carney, asked about Ryan’s comments, said the president has sought to find common ground with Republican lawmakers while that party’s Senate leader, Mitch McConnell of Kentucky, has said his top priority is making sure Obama doesn’t get re-elected.
“Sounds like politics of division to me,” Carney told reporters traveling with Obama back to Washington from a three-state visit to the West.
Carney also said a Ryan plan the House passed in April that would convert Medicare to a system of subsidized private health coverage and cut spending by more than $6 trillion over a decade “seems pretty divisive to me.”
Ryan’s speech came one day after the Congressional Budget Office reported the distribution of incomes in the United States has become increasingly unequal, with the top 1 percent seeing their earnings rise 275 percent over the past 30 years. Those whose earnings put them in the bottom 20 percent of incomes grew by 18 percent.
The average American household’s income grew by 62 percent between 1979 and 2007, the Congressional Budget Office said.
Information for this article was contributed by Lisa Mascaro of the Tribune Washington Bureau and by Brian Faler, Kate Andersen Brower and Roger Runningen of Bloomberg News.
Front Section, Pages 2 on 10/27/2011