Supercommittee proposal cuts Medicare, creates taxes

WASHINGTON – Supercommittee Democrats proposed a “grand bargain” of spending cuts and new taxes to reduce deficits, picking up Wednesday where President Barack Obama and House Speaker John Boehner broke off this summer as the panel has four weeks left to strike a deal.

The package, up to $3 trillion, was a first peek at what have been mostly closed-door deliberations. But it drew swift resistance from Republicans who objected to the inclusion of new taxes.

“I don’t think it was seen as a serious offer,” said a GOP aide familiar with the discussion.

The proposal was not aired publicly, but sources indicated it would combine spending cuts to the Medicare and Medicaid programs with higher taxes on the wealthy. Those familiar with the presentation differed on its ratio of spending cuts to new taxes, with some saying it relied more heavily on tax revenues.

The $500 billion it would cut from Medicare and Medicaid picked up where the summer’s negotiations left off. It proposes $400 billion in Medicare cuts equally divided between beneficiaries and providers, and up to $80 billion cuts to Medicaid.

Revenues would be raised mostly by taxing the wealthy by bumping up the high-end tax bracket and limiting deductions for those upper-income earners, those familiar with the talks said.

The Democrats’ plan also included using interest savings to pay for elements of Obama’s $447 billion jobs plan – an idea Republicans have shot down.

The supercommittee has until Nov. 23 to reach agreement on a proposal to reduce the nation’s deficits by at least $1.5 trillion over the next decade. Failure to cut at least $1.2 trillion would trigger mandatory cuts in 2013 that many are skeptical would ever take place.

The nation’s leading credit agencies have indicated they want to see a serious effort to rein in the nation’s debt load or the country risks having its once-stellar credit rating further downgraded, which would likely spike interest rates for ordinary Americans.

Bristling at criticism that the committee has been bogged down and unable to forge consensus, several members of the 12-member panel – made up of six Democrats and six Republicans – insisted Wednesday they are working at it.

“We’re not there yet, but I’m confident we are making progress,” said Sen. Patty Murray, D-Wash., the co-chair.