Update on Deficit Reduction and Tax Policy
Biden Deficit Reduction Talks – As of June 20, 2011, Vice President Biden and a group of lawmakers are shooting for an early July deadline to reach agreement on a deficit-reduction plan. The aim is to reach a deal in time for Congress to meet an August 2 deadline for raising the nation’s $14.3 trillion debt limit. Vice President Biden recently said that the talks are going well and that all have a goal of reaching a $4 trillion package over a decade. Biden has said that the two sides have started cutting smaller deals that are contingent on reaching a larger deal on tougher items, like revenue. Senate Minority Leader Mitch McConnell (R-KY) floated the idea that a short-term debt limit deal could be reached to provide more time for discussions on entitlement reform. Republicans are insisting on trillions in savings in exchange for their votes to increase the debt ceiling. Democrats say major changes to Medicare are off the table, while Republicans have dug in against tax increases.
Senate Action – On the topic of tax increases, Senate Republicans joined Democrats in an overwhelming vote to end a key tax break for the ethanol industry, demonstrating openness among some in the Senate GOP for the first time in a long time to close certain tax “loopholes”. The subsidy is worth roughly $6 billion a year to the ethanol industry. This vote may open the door for the elimination of other provisions favorable to certain sectors or types of individuals to be considered.
Gang of Six – No further developments on the Gang of Six since Senator Tom Coburn (R-OK) “decided to take a break” from the group’s conversations, signaling they have reached an “impasse” and raising doubts about the future of their attempts at a bipartisan compromise.