If the committee can't cut $1.2 trillion, some worry about a debt downgrade. | JAY WESTCOTT/POLITICO Supercommittee plans reveal chasm

Democrats and Republicans exchanged competing deficit reduction plans Wednesday with the biggest partisan split less over spending per se and more the willingness to find some solution to the impasse over tax revenues.

Each party assumes hundreds of billions of dollars in savings from federal health-care programs for the elderly and poor, as well as additional cuts from appropriations, already hit under the August budget accord. But Republicans continue to balk at any major commitment to new taxes, and the result is the GOP’s $2.2 trillion package is about a third less than the Democrats’ offer, which assumes $1.3 trillion in new tax revenues over the next 10 years.


The back-and-forth played out behind closed doors at the House-Senate supercommittee, which is charged with coming up with a plan that will achieve at least $1.2 trillion in deficit reduction over the coming decade.

With the Nov. 23 deadline less than a month away, both parties are under pressure to shoot higher but equally fearful of outright failure, forcing across-the-board cuts and what could be a political debacle for a Congress already held is such low regard.

As if sensing this, Democrats appear willing to put more on the table — including landmark changes impacting Medicare and Social Security — to try to force the GOP’s hand on taxes. Yet having begun the year boldly with ambitious deficit reduction plans, Republicans can appear paralyzed by their anti-tax political pledges — even at the risk of losing a major deficit reduction package.

Given the secrecy surrounding the committee’s deliberations — staff was asked to leave during some of Wednesday’s presentations —the full details of each plan are not certain. But from interviews with both sides, here is a partial picture:

Democrats outlined a package in the range of $3 trillion, including about $475 billion from health-related programs like Medicare and Medicaid and $400 billion more in cuts from appropriations. An additional $250 billion would come out of other federal benefits such as farm subsidies or the retirement system for federal workers. Though it is still a contentious issue inside the party, the leadership has also signaled it might include adjustments in the Consumer Price Index, impacting Social Security payments, as well as annual adjustments in the tax code. But all this would be contingent on also getting the added $1.3 trillion in tax revenues.

The Republican plan shares much of the same ground but allows for only $640 billion in revenues, and when this is broken down, very little comes directly from the sort of tax increases Democrats have been demanding.

“Their offer is a joke,” said one Democratic aide. “Democrats came to the table with an offer that had serious skin in the game for both parties. Rather than offering real solutions, Republicans are just doing more of the same posturing they do every time they walk away from efforts to constructively tackle this crisis.”

Indeed, about $440 billion appears to be generated instead by increased government fees, high patient co-pays under Medicare, for example, or increased Part B premiums charged to higher income beneficiaries — many changes that Democrats also accept but feel do not address the larger tax issue.

On the tax side, changes in the CPI would again yield some revenue, but the greater share of the tax revenue here — about $200 billion — is attributed to the impact of future tax reform spurring economic growth.

On the spending side, the GOP proposal assumes more cuts than the Democrats, but differences are less dramatic than on the tax side. The health-care and benefit savings are both larger, including $400 billion – or $150 billion more than the Democrats proposed — that would come from mandatory spending other than Medicare and Medicaid.

The details of these savings aren’t known, but the numbers suggest a new round of potential cuts from food stamp and federal nutrition programs, which have already been a target for the GOP in this Congress.

In the case of discretionary spending or appropriations, there is also an important political difference. Republicans list about $250 billion in savings here attributed generally to reducing personnel costs. Democrats appear willing to ask for $400 billion in savings — but want half of it to come from defense, a sore point for the GOP.

The drama inside the supercommittee is matched by a growing restiveness outside as well in Congress. Some lawmakers are furious at the power thrust into the hands of just a dozen members; others demand even bigger steps than those proposed Wednesday.

Nearly 100 rank-and-file lawmakers from both sides of the aisle signed on to a letter, urging the supercommittee to cut $4 trillion from the federal deficit — a show of political force from those left out of this budget-cutting process.

Top Democrats, including close allies of Minority Leader Nancy Pelosi (D-Calif.), also are agitating from outside the committee, infuriated by details of the Democratic offer — shaped more in concert with Senate Majority Leader Harry Reid (D-Nev.)

If the committee falls short of the $1.2 trillion mandated, some on Capitol Hill are worried about the possibility of a second debt downgrade from bond-rating agencies, which could rattle the financial markets.

“I’m extremely concerned about it,” said Rep. Peter Welch, a Vermont Democrat and member of his party’s vote-counting team, in commenting on a possible debt downgrade. “Anyone who isn’t ought to go back on their medication.”

As the supercommittee negotiates behind closed doors, the more important place in Washington might be the House floor — an unruly chamber where vote counts turn on a dime. House members of both parties are growing frustrated with a process that allows nearly no information flow and little input from anyone outside the panel anointed by House and Senate leadership.

Rep. Henry Waxman, a California Democrat close to Pelosi, represents those who are at wit’s end with the process.

The 36-year Washington veteran said he has “no stake” in the committee and called it an “outrageous process” that is “not open and transparent.” He said the “things put forward by Democrats … I would never vote for.

“I find it an outrageous process, that 12 people could rewrite the laws of the United States and come up with ideas just sitting there and getting into some mood that might influence them at the moment,” Waxman said in an interview.

Waxman added, “They don’t lay out proposals for examinations. They don’t get direct input on ideas. They get a whole bunch of things from other people officially, who knows who unofficially, then they’re talking themselves about a grand deal we won’t have a choice to discuss or amend. We’ll have to vote yes or no. That’s an offensive process.”

The anger among House Democrats is widespread. Rep. Charles Gonzales (D-Texas), the chairman of the Congressional Hispanic Caucus, said flatly: “We’re not part of the debate.”

Rep. Gerry Connolly (D-Va.) said Pelosi — who has been left on the sideline during the talks — is not a key part of negotiations and that Democrats could bolt any final agreement.

“It’s a mistake to not bring [Minority] Leader Pelosi into meetings,” said Connolly, who has been supportive of bipartisan agreements in the past. “If she’s not a stakeholder in a final product, neither is the Democratic caucus.”

The concern about a debt downgrade also hovers over Congress. John Chambers of Standard & Poor’s, who is a managing director of sovereign ratings, told POLITICO in an interview that the agency does not comment on plans in advance. But the agency does expect that the Budget Control Act will be implemented, and if it doesn’t pass, automatic cuts must take place.

S&P has lowered the nation’s credit rating in the past based, in part, on political paralysis, and if the committee falls short because of that same reason, it would “validate the decision to have lowered the rating.

“Whether it would demonstrate a new, more profound state of political paralysis, I don’t think so,” Chambers said.

The 100-person letter represents the widest consensus but the least detail. It was an effort that was spearheaded by Rep. Heath Shuler of North Carolina on the Democratic side and Reps. Mike Simpson of Idaho, Steve LaTourette of Ohio and Tom Rooney of Florida on the Republican side. Late Wednesday, there were roughly 30 to 35 Republicans who signed on to the letter, and 45 to 50 Democrats.

The group said “all options for mandatory and discretionary spending and revenues must be on the table.”

Many in Republican and Democratic leadership were caught off-guard by this breakaway group. On the House floor, Shuler was on the Republican side, talking to lawmakers, and Simpson ventured over to the Democratic side.

The group is important, because of its close ties to leadership. While Shuler is the public face of the effort, Minority Whip Steny Hoyer (D-Md.) was asking lawmakers to sign on to the letter, according to sources familiar with his efforts. Hoyer and Simpson have been meeting for months with lawmakers from both sides of the aisle.

In GOP circles, Simpson, LaTourette and Rooney all are close to Boehner. In fact, Rooney said the purpose of the letter was to revive the idea of the “grand bargain,” which the speaker attempted to negotiate with President Barack Obama.

“What we’re saying is, we wanna go big, we wanna make sure that we hit the number and then some — and then, we want you to consider all options,” Rooney said. “There’s certain things some of us would be comfortable with, and other things we wouldn’t necessarily be. … That doesn’t mean I don’t want you guys to make sure you understand a good number of members want you to try to do something big here, à la whatever Boehner and Obama were talking about before that we can try to salvage.”

Rep. Jim Himes (D-Conn.), a leader among the moderate New Democrats, has been involved in the bipartisan process from the beginning. Himes said the group wanted to “generate some pressure and cover internally.”

“Our theory is when you get a big group of people out there, they will take some risks,” Himes said.

Simpson said that members “are nervous” when raising revenues and cutting entitlement enter the equation. “We all know we have to do all of those things,” Simpson said.

Anna Palmer, Jonathan Allen and John Bresnahan contributed to this report.