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  • bluecheese4u bluecheese4u Feb 14, 2013 3:44 PM Flag

    Senate Democrats Offer Plan to Delay U.S. Spending Cuts

    Senate Democrats Offer Plan to Delay U.S. Spending Cuts

    By James Rowley & Roxana Tiron - Feb 14, 2013 1:02 PM MT

    U.S. Senate Democrats are proposing a 10-month delay in the $1.2 trillion of automatic spending cuts for defense and domestic programs set to begin March 1.
    The plan of about $110 billion would delay the across-the- board cuts with equal amounts of tax revenue increases and spending cuts, said Washington Democrat Patty Murray, chairman of the Budget Committee. Half of the spending cuts would come from defense and the other half from non-defense programs, she said.

    “We have a plan, and it’s got real money,” Senator Barbara Mikulski, a Maryland Democrat who leads the Senate Appropriations Committee, told reporters today. “This is real money and real revenue - we’re doing revenue, we are closing loopholes - we’re reducing expenditures.”
    The spending-cut deadline marks another fiscal showdown between President Barack Obama and congressional Republicans over whether efforts to reduce the deficit should include revenue or be limited to spending cuts. Unless Congress acts, $1.2 trillion in across-the-board spending cuts, known as sequestration, will take effect over nine years, which could hurt economic growth
    House Speaker John Boehner of Ohio and other Republicans oppose replacing the cuts with any new revenue.
    “The sequester will be in effect until there are cuts and reforms that put us on a path to balancing the budget over the next 10 years, period,” Boehner told reporters today. Still, he said his chamber would be “happy to take a look” at any plan passed by the Senate.
    Buffett Rule
    The Democrats’ proposal would set a minimum 30 percent effective tax rate for the highest earners, a provision known as the Buffett Rule after billionaire investor Warren Buffett. Democratic Senators Max Baucus of Montana and Tom Harkin of Iowa said the plan’s non-defense spending cuts would come largely from reducing direct payments to farmers.
    The bill also would require oil extracted or imported from tar sands to be subject to the 8 cents per-barrel tax that goes to the Oil Spill Liability Trust Fund, said Senator Mark Begich, an Alaska Democrat. Crude oil is already subject to the tax.
    Begich said he and other oil-state Democrats prevented the party from including Obama’s other proposed changes that would raise taxes on oil and gas companies.
    ‘Too Small’
    Senator Richard Durbin of Illinois, the chamber’s second- ranking Democrat, said, “The amount of revenue on the table for deficit reduction is way too small” without additional measures such as the one Senate Democrats are announcing today.
    Democrats’ leverage to push for more revenue, on top of the $600 billion in tax increases they secured in a Jan. 1 agreement, will increase “as people come to understand” the effect of the automatic cuts, Durbin said.
    White House spokesman Josh Earnest said the Democrats’ plan aligns with Obama’s position that a plan should include revenue increases and some additional spending cuts.
    “This is really important,” Earnest said. “It would be bad for our economy” if the spending reductions go into effect.
    The Republican-dominated House last year passed legislation to replace automatic cuts to defense spending with reductions in other areas.
    “When I hear the president and members of Congress say that the solution must include raising taxes further, I question their seriousness in fixing the overall problem,” Senator Richard Shelby, an Alabama Republican, said at a hearing held by Mikulski’s committee.
    Defense Cuts
    Military leaders are pressuring lawmakers to avoid defense spending cuts. Deputy Defense Secretary Ashton Carter said at the Senate Appropriations Committee hearing that the effects would be “devastating” for the defense industry.
    “All this is the collateral damage of political gridlock,” Carter said.
    Harkin said at the Appropriations hearing, “I take take exception to those who say we have a spending problem.”
    Instead, Harkin said a “misallocation in our tax code” is placing a burden on the nation’s most vulnerable, such as the elderly, homeless and the disabled. He said he opposes proposals to spare only the Defense Department from cuts.
    “If defense is exempted, then the disabled ought to be exempted also,” Harkin said.
    Leaving the cuts in place would shave U.S. economic growth this year by 0.6 percent and cost 750,000 jobs by the fourth quarter, Congressional Budget Office Director Doug Elmendorf said at a hearing two days ago.


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