Breaking news this morning from CBS:
February 14, 2013 7:05 AM 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.
The reality is this, March 1 is two weeks away, and to make matters worse, Congress isn't in session next week.
You'll note that on Tuesday Night during his State of the Union Address, President Obama took his case directly to America:
In 2011, Congress passed a law saying that if both parties couldn’t agree on a plan to reach our deficit goal, about a trillion dollars’ worth of budget cuts would automatically go into effect this year. These sudden, harsh, arbitrary cuts would jeopardize our military readiness. They’d devastate priorities like education, energy, and medical research.They would certainly slow our recovery, and cost us hundreds of thousands of jobs. That’s why Democrats, Republicans, business leaders, and economists have already said that these cuts, known here in Washington as “the sequester,” are a really bad idea.
Now, some in this Congress have proposed preventing only the defense cuts by making even bigger cuts to things like education and job training; Medicare and Social Security benefits.
That idea is even worse.
Going back to the basic proposal the Democrats will be unveiling today it is important to note that in 2011 - during the supercommittee debacle - the President offered his own deficit reduction plan
. I've mentioned it before.
What’s in it?
Well, $1.5 trillion of it is higher taxes. About half of that is the expiration of the “rich people only” portion of the Bush tax cuts. The rest comes from closing loopholes and for the proposed new millionaire’s minimum tax so that high-income individuals won’t be paying lower marginal rates than the middle class.
Then you have about $1 trillion in war savings as the fighting winds down in Iraq and Afghanistan.
Last, you have the domestic spending element. That includes changes worth $248 billion to Medicare and $72 billion to Medicaid which the administration is promising fall on providers rather than patients and don’t involve any deep changes to the basic nature of the programs... There are also some other domestic spending cuts, worth about $200 billion...
the “other” cuts, which are as follows:
— $33 billion from agriculture subsidies.
— $42.5 billion from Federal employee retirement benefits, on both the civilian and military side.
— $4.1 billion from the disposal of unused government assets.
— $92.2 billion from restructuring government operations and reducing government liabilities.
— $77.6 billion from improving Federal program management and reducing waste and abuse.
The Democratic package replaces the 10-year sequester for the rest of 2013 -- 10 months -- with $120 billion in spending cuts and new tax revenue, split 50-50.
. With that in mind, it's important to remember that since the President proposed his deficit reduction plan in 2011, much of Bush tax cuts were turned back, thus raising roughly $600 billion in new revenues over 10 years
. We have been winding down the wars in Iraq and Afghanistan. Truth be told, since 2011, many of these deficit reduction proposals have been put into place. This is from October 2012:
Policymakers have already enacted about half of Bowles-Simpson’s nearly $2.9 trillion of program cuts. Because of the caps on discretionary funding in last year’s Budget Control Act (BCA), discretionary spending will be $1.5 trillion lower over 2013-2022 than under the Congressional Budget Office’s August 2010 baseline (the baseline in use when the Bowles-Simpson commission deliberated). Including the associated interest savings, the total budget savings reach $1.7 trillion.
The majority of the savings in Bowles-Simpson that haven’t yet been achieved is on the revenue side. Excluding the enacted savings, the Bowles-Simpson plan would achieve an additional $4.6 trillion in deficit reduction over ten years, consisting of $1 in program cuts for every $2 in revenue increases.
It's clear to me that the GOP is in a corner again. Quietly, the President has been reducing the deficit, probably too quietly, but what is happening here is that his economic agenda is being achieved. We've had many of the cuts, it is time to raise some more revenue -- and that is what the Democrats are proposing this morning. Yes, it is kicking the can down the road, but with one week left I don't know what else can be done unless the GOP decides to follow their pattern of disaster politics and let the sequester happen.
This should be an interesting week.