So what will this new plan for deficit reduction look like? Ten years of cuts get turned into ten months of tax hikes and cuts in equal measure. The tax hikes in the plan equal that gained by Barack Obama in the January standoff for the rest of this year. The cuts fall mainly in defense spending and agricultural subsidies. Will that fly? Only like the domesticated turkey that it is:
CBS News has learned that the Senate Democrats’ long-awaited plan to avert the sequester, being announced by Sen. Patty Murray, D-Wash, Thursday, would replace the 10-year sequester for the rest of 2013 — 10 months — with $120 billion in spending cuts and new tax revenue, split 50-50.
Most of the revenue would come from implementing what’s known as the Buffett Rule, named after investor Warren Buffett. The rule would cap deductions and loopholes for millionaires so they pay at least 30 percent of their salary in taxes. Senate Democrats tried and failed to pass the Buffett Rule last year.
The spending cuts would come from eliminating agriculture subsidies and from trimming the defense budget, though not as drastically as the sequester would.
Republicans have said all along that they will not provide any more revenue in a sequestration replacement. They provided Obama with $60 billion in new annual revenue already (at least in static-analysis terms) in the New Year’s Day fiscal cliff deal, with almost nothing in spending cuts. Furthermore, they don’t have to do anything. They can just stand pat and wait for the sequester to hit, and they get their spending cuts — actually, just cuts in the rate of spending increases — without having to hike taxes any further, especially for a new version of the AMT that Congress just finally fixed after more than four decades of having to deal with its ill-considered structure.
And if Democrats really wanted to tempt Republicans, the cuts would have come from somewhere other than defense. Given a choice between tough cuts to the Pentagon and no tax hikes, or slightly-less tough cuts and taking another $60 billion a year out of this foundering economy, most Republicans will choose the former over the latter.
Besides, the Senate has to pass its version first. Boehner has made it clear that he won’t be negotiating outside of normal order this year. Let the Senate try pushing through the second tax hike of the year, and let the House pass its own version of sequester replacement, and then a conference committee can negotiate as the system is designed. Until the Senate actually acts to pass budgets, this is nothing more than a press release.