Biden Group Talks Taxes and Triggers
The bicameral, bipartisan debt limit and deficit reduction negotiations chaired by Vice President Biden resumed today with the group’s fifth meeting since it first convened last month. The pace of the talks is expected to pick up next week with as many as three meetings.
Revenues and budget process reforms were on the agenda for today’s meeting. Revenues is often where a significant divide exits. Democrats want revenue increases to be part of a deal, while Republicans want increases in taxes off the table. CRFB has recommended eliminating/reducing tax expenditures, the various tax breaks that are essentially spending by another name, as a ripe area for compromise (see also here and here) and we have said that it is likely that some additional revenue is going to have to be part of a fiscal plan.
While there is general agreement on the need for budget process changes to promote deficit reduction, there is a partisan divergence in opinion over which tool to use. A new resource from the Peterson-Pew Commission on Budget Reform succinctly explains the various options and compares them. Republicans prefer a cap on federal spending while the White House wants a trigger based on the size of the debt in relation to the economy. The Peterson-Pew Commission has also provided recommendations for making a debt trigger work.
The group still has a long ways to go towards reaching an agreement by July. The members are still searching for specific spending cuts that they can agree on. CRFB recently identified over $1 trillion in common-ground savings based on recent fiscal plans from each party.