US lawmakers might opt to postpone tough tax decisions until next year as they struggle to forge a deficit-reduction deal over the coming week, congressional aides said on Monday.
With time running short, the “supercommittee” of six Democrats and six Republicans could agree to some spending cuts and instruct their fellow lawmakers to raise more tax revenue by retooling the Byzantine tax code next year, aides said.
That could allow the panel to reach a deal by its deadline next Wednesday and temporarily resolve a budget battle that has dominated Washington for most of this year. However, it would push the tax question well into next year’s election season, when partisan tensions will be running even higher than usual.
The idea has been talked about for months as a possibility and is being looked at more closely as little progress is evident as the deadline approaches.
US Representative Eric Cantor, the No. 2 Republican in the US House of Representatives, expressed optimism that a deal could be reached, but declined to comment on the possible details.
“I believe they will reach agreement by the deadline,” Cantor told reporters.
A senior House Republican aide told reporters that Republicans were waiting for Democrats to come forth with new ideas and Democratic supercommittee member Chris Van Hollen said: “conversations continue.”
Republican Representative Jeb Hensarling on Sunday talked about a possible “two-step approach” on a television news show.
A senior Democratic aide said on Monday: “It is being discussed. That is clear.”
Another option under discussion is a deal that would lead to more tax revenue now, the aide said.
Specifics of that option were not available, but Democrats have been pushing to end some special interest tax breaks, such as one for the oil and gas industry and for corporate jets.
Instructing the two tax-writing committees in the US Congress to overhaul the tax code in a way that could limit or end some tax breaks could allow the supercommittee to avoid deadlock and heap even further scorn on Congress at a time when it already faces record low approval ratings.
However, the panel would probably still have to tell the House of Representatives Ways and Means Committee and the US Senate Finance Committee how much new revenue to raise over 10 years and how to structure those revenues.
Democrats also might press to link possible spending cuts in the Medicare and Medicaid healthcare programs to a successful outcome on tax reform next year.
Republicans already rejected such a proposal last week.
“What will the guidelines be [that are] given to the committee?” the senior Democratic aide asked.
Meanwhile, other ideas have been swirling around the supercommittee, without any clear sign of traction, including some “small deals,” congressional aides said.
Republicans are considering a structural reform to Medicare that would limit the program’s growth and allow recipients to choose a private health plan instead if they wished, softening an approach they advanced earlier in the year.
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