Senate Democrats Offer a Proposal to Head Off Automatic Cuts
February 14, 2013
Senate Democratic leaders reached agreement Thursday on a $110 billion mix of tax increases and spending cuts to head off automatic spending cuts through the end of the year. But with even some Democrats tepid on the proposal, the chances of a deal before the March 1 deadline have receded.
The Democratic proposal would establish a 30-percent minimum tax rate on incomes over $1 million to raise about $54 billion over 10 years. It would raise $1 billion more by subjecting tar sands oil to a tax to pay for oil-spill cleanups and by ending a business tax deduction for the cost of moving equipment overseas.
The remaining $55 billion would come from $27.5 billion in defense cuts from 2015 to 2021 and $27.5 billion in farm-subsidy cuts.
The legislation is more a bargaining position than a solution. Republicans have said they will not accept any new taxes in a deal to head off the so-called sequester — across-the-board cuts to defense and domestic programs of 5 percent to 8 percent and totaling about $1 trillion over 10 years. But Senate Democratic leaders said Thursday that their party must rally support around an alternative to try to move negotiations forward.