By ANDREW TAYLOR and DAVID ESPO, Associated Press
WASHINGTON - As the nation's debt soared past $15 trillion, congressional Republicans and Democrats struggled Wednesday to salvage a yearlong assault on federal deficits, their efforts hampered by politically charged disagreements over taxes and the future of enormously expensive government benefit programs.
The talks at a standstill, Democratic officials familiar with the work of Congress' debt-reduction supercommittee disclosed they had floated a secret counteroffer late last week to generally accept a Republican framework for a $1.5 trillion compromise, while differing on numerous key details.
Democrats signaled a willingness to cut spending by $876 billion, including $225 billion from Medicare and $50 billion from Medicaid, these officials said, and raise tax revenue by $400 billion, far less than they had earlier demanded.
They also recommended using $700 billion in unspent funds from the wars in Iraq and Afghanistan for a jobs program along the lines President Barack Obama wants, plus steps to protect the upper middle class from the alternative tax and extending financing for doctors who treat Medicare patients.
The supercommittee has until Nov. 23 to approve legislation that cuts future deficits by at least $1.2 trillion over a decade. Failing that, automatic spending cuts totaling that amount would take effect beginning in 2013. That's a result that lawmakers on both sides of the political divide - particularly defense hawks - say they oppose.
The supercommittee's deliberations marked the third major round of deficit-cutting negotiations this year of divided government. The supercommittee was set up under legislation passed in August to raise the limit on the government's ability to borrow.
But with just a week before its Thanksgiving deadline and no sign of progress, each side periodically lobbed a political accusation at the other, often an indication that compromise efforts are approaching gridlock.
And leak of the Democratic offer came after Republican press operatives had criticized Democrats all week for not countering a GOP plan in which Republicans for the first time endorsed new tax revenues.
"We need to find out whether our Republican colleagues want to continue to negotiate or whether they've drawn a hard line in the sand," supercommittee Democratic Rep. Chris Van Hollen of Maryland, said. "The question is whether they've kind of said 'take it or leave it.' "
"What I've yet to see is a plan that fundamentally solves the problem," Rep. Jeb Hensarling of Texas, the panel's top Republican, told reporters.
Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee and a member of the panel, was among few to express optimism during the day, telling reporters in his home state in a conference call that the panel is not stalemated and that as recently as Tuesday night he was swapping proposals with Republican colleagues. He said he planned to do more of it the remainder of the week.
"It's where I expected to be. The world is run by deadlines," Baucus said. "We have a deadline of Nov. 23, the day before Thanksgiving, and boy, oh boy, I hope we get there."
The talks turned particularly rocky last week, when Sen. Pat Toomey, R-Pa., presented an offer to several Democrats that envisioned raising almost $300 billion in additional revenue through an overhaul of the tax code that also lowered the top individual tax rate from 35 percent to 28 percent. It would cut the corporate rate as well.
Republicans pointed to the offer as a possible turning point, given the party's long record of opposition to higher taxes.
But Democrats attacked it as a tax cut for the rich in disguise, and the talks seemed to lose momentum.
The secret Democratic counterproposal came from Sen. Patty Murray, D-Wash., according to Democrats, in a meeting on Friday with Hensarling.
In it, Democrats suggested raising $400 billion in additional revenue through eliminating tax breaks by means of an overhaul of the IRS code, and cutting $876 billion in spending.
Unlike Republicans, who wanted to lock in lower tax rates through tax reform as part of a plan to raise $250 billion, Democrats said they would find the additional revenue by eliminating loopholes and other existing tax breaks. They also said they would not extend the Bush-era tax breaks due to expire at the end of 2012.
On spending, Democrats signaled they would accept a GOP proposal to trim Medicare by $225 billion and Medicaid by another $50 billion as part of the $876 billion cut, officials said.
But they omitted other parts of the GOP offer, including a proposal to raise the age of Medicare eligibility from 65 to 67 and a different proposal to slow the rise of annual cost-of-living increases under Social Security.
Hensarling's office had no immediate response, but earlier in the day he said Democratic offers paled in comparison to the size of the debt crisis.
In addition Democrats suggested using $300 billion in unspent funds from the wars in Iraq and Afghanistan for a jobs program, another $200 billion to protect the middle class from the alternative minimum tax and $200 billion more to assure funding for doctors who treat Medicare patients.
In their offer, Democrats said, Republicans had recommended using the war money, targeting $690 billion to offset the impact of the alternative minimum tax and another $19 billion for a short-term extension of Medicare physician payments.
Elsewhere, conservative criticism continued to bubble over last week's GOP break on taxes.
"We're ceding the high ground here. Raising taxes is a bad deal. I think it's harmful to the economy. I think it is destructive to this nascent economic recovery, and is bad politics as well," Rep. Patrick McHenry, R-N.C., said. "It is a core part of conservative orthodoxy."
McHenry has gathered more than 70 GOP signatures on a letter to the supercommittee urging the panel not to raise taxes. "Increasing the tax burden on American businesses and citizens, especially during a fragile recovery, is irresponsible and dangerous to the health of the United States," the letter states.
"I'm not going to vote for a tax increase," said Rep. Allen West, R-Fla., a tea party favorite. "I'm not going to go to the American people and ask them to give us more."
Meanwhile, a bipartisan gaggle of lawmakers held a news conference to urge the panel to "go big" and far exceed the minimum $1.2 trillion deficit target set for the panel this summer when it was established by a hard-won budget and debt limit pact between Obama and House Speaker John Boehner, R-Ohio.
"This group can do it. And they need to know, if they are bold, if they are brave, if they go big, we will stand with them, and the American people will stand with them," said Senate Budget Committee Chairman Kent Conrad, D-N.D.
Conrad was a member of Obama's deficit panel and the Senate's so-called Gang of Six, which both recommended deficit cuts of about $4 trillion over the coming decade.
Associated Press writer Matt Gouras in Helena, Mont., contributed to this report.
Millionaires on Capitol Hill: Please tax me more!
By LAURIE KELLMAN
WASHINGTON - Lobbyists for a day, a band of millionaires stormed Capitol Hill on Wednesday to urge Congress to tax them more.
They had a little trouble getting in. It turns out there are procedures, even for the really rich.
But once inside, their message was embraced by liberals and tolerated by some conservatives - including the ideological leader of anti-tax lawmakers, who had some advice for them, too.
"If you think the federal government can spend your money better than you can, then by all means" pay more in taxes than you owe, said Grover Norquist, of Americans for Tax Reform, a group that has gotten almost all congressional Republicans to pledge to vote against tax hikes. The IRS should have a little line on the form where people can donate money to the government, he suggested, "just like the tip line on a restaurant receipt."
One of the millionaires suggested that if Norquist wanted low taxes and less government, "Renounce your American citizenship and move to Somalia where they don't collect any tax."
In the silence left by the private efforts of the "supercommittee" to find $1.2 trillion or more in deficit cuts by Thanksgiving, free advice flowed in public.
And not just any advice: pie-in-the-sky suggestions from those not connected to the talks, mostly to reopen debates that have led nowhere. The millionaires want the panel to raise taxes on people who earn more than $1 million, even though most Republicans are committed against the idea. And 150 House member and senators urged a much bigger debt-and-deficit deal, even as a small-scope agreement is proving elusive.
While they were at it, the lawmakers insisted that bipartisanship was not, in fact, dead.
This group of House members and senators shared a stage and some jokes and signed a letter urging the supercommittee of Republicans and Democrats to find the required $1.2 trillion in cuts - plus about $2.8 trillion more. They all want the panel to avoid triggering automatic cuts as a penalty for failing.
So this uneasy alliance of 150 Republicans and Democrats will vote for whatever deal the supercommittee strikes?
"No," said House Democratic Whip Steny Hoyer. "Nobody's going to commit to the deal until they see the deal."
What deal? There is no evidence that one is near, so the millionaires tried to meet with anyone who would meet with them.
The progressive caucus did, eagerly and on-camera. The rest wasn't so easy.
At a basement entrance to the Capitol, a police officer pointed to the name badges that identified each wearer as "Patriotic Millionaire."
"That is not a visitor's badge," the officer said. "Go to the visitors desk and get a visitor's badge."
Off they trudged, a group mostly of men in business-casual clothing toting laptops and umbrellas, to a desk visited by tourists and lobbyists. Badges secured, they headed in.
Lawrence Benenson, vice president of Benenson Capitol Co., ran into freshman Rep. Kristi Noem, R-S.D., in an elevator.
"I'm with the Patriotic Millionaires and we want to pay more in taxes," he told her.
"How much more?" she asked.
Then it was off to meet, not with senators but their staffs - and not in the Capitol but in offices across the street.
Progress was not made, by all accounts.
A meeting with an aide to Sen. Jon Kyl, R-Ariz., opened with his aide announcing that the senator believes the wealthy pay more taxes than their fair share, according to one of the millionaires, Matthew Palevsky, a consultant and founder of the Council on Crime Prevention.
"We defined it as not paying our fair share," Palevsky said of the 20-minute chat. "It was clear we were coming from different points of view."
In a meeting with Rep. Ralph Hall, R-Texas, the congressman faux-proposed - apparently - to an aide to the millionaires. She declined.
Then it was off, on a bus not a limo, across town to see Norquist.
Why were they bothering with him?
"That's what I asked this morning," said one of the millionaires, Frank Jernigan, a former senior software engineer for Google.
"It's a media hook," offered another, Guy Saperstein, a retired lawyer and former president of the Sierra Club Foundation.
Such candor is not the norm in these parts.
For his part, Norquist said he was ready for the group with a tongue-in-cheek Torah lesson: Maimonides and his "eight degrees of charity." That's what Norquist says the millionaires are essentially proposing with their tax-me-more pitch. Perhaps there should be a ninth, Norquist suggested.
"Nobody's holding them back" from donating money to the federal government, he said as he prepared for the group's arrival. "They're saying, 'Gee, I'd sure like to write a big check to the federal government, if someone would just stop stopping me."'
Associated Press writer Larry Margasak contributed to this report.