Oct. 26 (Bloomberg) -- Senate Democrats on the congressional supercommittee charged with reducing government debt proposed a plan that would cut almost $3 trillion over 10 years and includes $1.3 trillion in tax increases, according to a congressional aide.
The remainder of the proposal is comprised of spending cuts, including ones that would come at the expense of the publicly funded health-care programs Medicare and Medicaid, as well as fee increases, said the aide, who wasn’t authorized to speak publicly.
The plan also includes measures aimed at boosting the economy, including extensions of a payroll tax break and jobless benefits due to expire at the end of this year, the aide said. It was rejected by Republicans on the committee because of the tax increases, the aide said.
The panel, set up this summer as part of a deal to raise the U.S. debt limit, is seeking a plan to save $1.5 trillion over the next decade. The government’s credit rating likely will be downgraded a second time this year if the panel deadlocks, Bank of America Corp. economist Ethan Harris wrote last week in a research note. He predicted the panel would fail to agree on a plan.
“The ‘not-so-super’ deficit commission is very unlikely to come up with a credible deficit-reduction plan,” Harris wrote. “We expect at least one credit downgrade in late November or early December.”
--Editors: Jim Rubin, Justin Blum
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