(Updated with Medicaid proposal in 18th paragraph.)
Oct. 14 (Bloomberg) -- Members of Congress on the supercommittee charged with trimming the national deficit are facing a menu of leftovers.
The 12-member panel’s closed-door meetings for the past month have focused on spending cuts in areas accounting for 12 percent of the federal budget -- the same areas lawmakers discussed in previous unsuccessful talks led by Vice President Joe Biden, according to one Republican and one Democratic aide who weren’t authorized to speak publicly.
Today is the deadline for congressional committee leaders to submit recommendations to help the panel identify $1.5 trillion in savings over the next decade. The bipartisan committee is assigned to propose a plan by Nov. 23, and if Congress doesn’t pass it by Dec. 23, across-the-board spending cuts of $1.2 trillion would begin in fiscal 2013.
“The time frame they’re expecting these people to operate in is just completely unrealistic and ridiculous,” said Scott Lilly, former Democratic staff director of the House Appropriations Committee. “The work hasn’t begun yet.”
House Democrats made their recommendations yesterday, focusing more on job creation than debt reduction. After a series of standoffs over spending cuts sought by House Republicans that almost shut down the government, Republican leaders of House committees overseeing taxes and entitlements aren’t offering formal proposals to say how they would cut the government.
‘Recommend to Myself’
“I’m on the committee, so I don’t think I need to recommend to myself,” House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, said in an interview yesterday. The House Energy and Commerce Committee also doesn’t plan to make a recommendation to the supercommittee, a Republican committee aide said.
Congress created the supercommittee in early August as part of a deal to raise the U.S. debt limit. On Aug. 5, Standard & Poor’s lowered the U.S.’s AAA credit rating for the first time, saying lawmakers weren’t doing enough to reduce record deficits.
Since then a stalemate has persisted between Democrats, who want higher taxes to help close the deficit, and Republicans who oppose tax increases and seek to reduce entitlement programs such as Medicare.
Some lawmakers are talking about short-circuiting the automatic cuts set to take effect in 2013.
“The Congress is not bound by this,” Arizona Senator John McCain, a Republican, said yesterday at a news conference. “It’s something we passed; we can reverse it.”
No ‘Grand Bargain’
Months of 9 percent unemployment have turned the focus in Congress to job-creation bills and away from President Barack Obama’s onetime priority of a “grand bargain” between the parties to rein in the debt.
Congressional Budget Office Director Douglas Elmendorf told supercommittee members last month that the real deadline for a proposal is early November, to give his agency time to calculate how much money a plan would save.
The savings House Democrats identified yesterday, such as expanded auctioning of airwaves, amount to a tiny fraction of the budget. The top Republican on the House Armed Services Committee, Howard P. “Buck” McKeon of California, urged the panel to cut entitlements such as Medicare and Social Security instead of defense.
Medicare and Medicaid
According to a memo outlining options during previous talks led by Biden, negotiators could wring about $224 billion to $332 billion out of the budget over 10 years by targeting areas such as spectrum broadband auctions, postal service overhaul and agricultural subsidies.
Because those programs account for a sliver of the overall budget, supercommittee negotiators can’t get to their $1.5 trillion goal without touching entitlements, said Lilly.
There are some signs lawmakers want to give the committee a boost. Senate Minority Leader Mitch McConnell, a Kentucky Republican, said on Oct. 12 that parts of Obama’s unsuccessful jobs plan could be considered by the supercommittee.
That same day the Blue Dog Coalition of fiscally conservative House Democrats said it supports a bipartisan Senate proposal to allow American multinational companies to bring back overseas earnings to the U.S. at reduced tax rates to help stimulate the economy. They estimate up to $1.4 trillion in private money could return to the U.S.
Today, nine of the 11 Republicans on the Senate Finance Committee released a set of recommendations. They called for overhauling the tax code in a way that doesn’t raise revenue, repealing the 2010 health-care law and addressing the eligibility age for Medicare. The committee’s Republicans proposed converting Medicaid health care for the poor from an open-ended entitlement to states to a block grant that would cap the federal contribution and give states greater flexibility to control eligibility and benefits.
Representative John Kline of Minnesota, chairman of the Education and the Workforce Committee, asked the supercommittee to consider restricting the Pell college tuition grant program to give money for no more than 12 semesters, down from 18, and to eliminate grants to students who attend college less than half-time.
Kline, whose committee has voted to end 42 federal education programs, also suggested the supercommittee look at his panel’s list of education and job-training programs it considers duplicative.
Democratic Senator Tom Carper of Delaware, a member of a bipartisan group urging the supercommittee to go bigger than its $1.5 trillion mandate, identified potential common ground areas such as pension overpayments to postal workers, cracking down on late and delinquent tax filings and eliminating Medicare and Medicaid fraud and waste that could save billions of dollars.
Lilly suggested Congress may let the supercommittee move back its Nov. 23 deadline. The panel will probably need at least two more months to complete its work, he said, and in the meantime, Congress can forestall the automatic cuts through the annual appropriations process.
David Walker, former U.S. comptroller general, said the committee could set a goal for savings to be identified by various congressional committees that could put off a broader debt deal until after the 2012 elections.
“We have to be realistic given the composition of this committee and the limited amount of time they have to do their work,” said Walker, a leading proponent for a debt deal. “They’re not going to be coming up with any grand bargain.”
--With assistance from Laura Litvan, Roxana Tiron, Richard Rubin, Alex Wayne and Derek Wallbank in Washington. Editors: Laurie Asseo, Don Frederick
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