Durbin outlines liberal plan to avert 'fiscal cliff'

Susan Davis, USA TODAY | USATODAY

WASHINGTON -- Sen. Richard Durbin, D-Ill., is optimistic President Obama and congressional leaders will reach a deal to avert the "fiscal cliff" of tax hikes and spending cuts at the end of the year only if Republicans relent on their opposition to raising individual tax rates on the wealthy.

"President Obama and Democratic candidates campaigned on the idea that the wealthiest Americans should be asked to pay a little more in taxes -- and voters endorsed it," Durbin, the Senate's No. 2 Democrat, said Tuesday in a speech at the liberal think tank Center for American Progress.

Durbin reiterated a position supported by Senate Majority Leader Harry Reid, D-Nev., for Congress to extend the current individual tax rates for all but the top 2% and allow the current rates for those earning over $250,000 year to expire at the end of the year and revert to the pre-Bush era top rate of 39.6%.

The Senate has already passed a bill to extend the rates for all but the wealthiest of Americans, but the GOP-controlled House has not taken up the legislation because Republicans want to maintain the current tax rates for all. Instead, Republicans have coalesced around the idea that enough revenue can be raised to reduce the deficit by eliminating loopholes and capping deductions.

The senator said income inequality in the United States is a moral issue and that current tax laws disproportionately favor the wealthy. "Think about this: Hedge fund managers make as much in two minutes as Navy SEALs make in a year. Does that sound right to you? It doesn't to me."

Durbin's speech -- intended to outline the liberal view of how the end of year "fiscal cliff" can be avoided -- outlined a plan to deal with taxes first and entitlements later. He said Democrats will fight any efforts to gut Obama's health care law, or privatize Social Security and Medicare. Durbin said liberals need to negotiate how to resolve the long-term viability of Medicare and Medicaid but "those conversations should not be a part of a plan to avert the fiscal cliff." Any proposal that doesn't include some form of entitlement reform is widely viewed as a non-starter among Republicans.

"A balanced approach means real cuts, now. I'm not saying this because it's the Republicans position, though it is. I'm not saying it because I have anything against the government, which I don't. I'm saying it because it's the only approach that will work," Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday.

Durbin also outlined liberal resistance to any deal that includes spending cuts to social programs that help the poor — a popular Democratic position supported by outside labor unions and liberal activists. "Let me be clear: Those cuts will not happen," he said.

Durbin maintained a Democratic view that any long-term deficit reduction plan must include some economic stimulus. "We can't just cut our way out of this deficit or tax our way out. We have to think our way out. We have to invest and work our way out," he said.

Unless Washington reaches a deal before the end of the year, all of the Bush era tax cuts will expire Dec. 31 at the same time automatic spending cuts threaten defense and domestic programs if Obama and a divided Congress can't find compromise. The combined effect of the two threaten to send the U.S. economy back in to recession.