* Republican Graham: budget talks "stuck" on tax revenue
* Democrats target tax breaks for wealthy, big corporations
By Richard Cowan and David Lawder
WASHINGTON, Nov 7 The panel of U.S. lawmakers
seeking to craft a bipartisan budget deal is deadlocked over tax
revenue early in its deliberations, a Senate member said on
Thursday, reinforcing fears that a Dec. 13 deadline could pass
with no agreement.
Republican Senator Lindsey Graham told Reuters the
negotiations were "stuck, not irreconcilably, but stuck."
Nearly one month ago, Congress created the House of
Representatives-Senate working group as part of a deal that
reopened the federal government following a 16-day shutdown and
raised U.S. borrowing authority to avoid a potential default.
The panel's purpose, in part, is to restore some order to
the federal budget process and stop lurching from one temporary
funding crisis to another, each of which carries the risk of a
The deadlock described by Graham would be no surprise.
Because of deep differences in priorities between Republicans
and Democrats, the 29-member "conference committee" started work
on Oct. 30 with low expectations.
Many Democrats and Republicans hope at least to replace or
adjust the large and indiscriminate across-the-board spending
cuts-known as the "sequester," which have hit federal agency
budgets hard, particularly for the Defense Department.
Graham, in a brief hallway interview in the Capitol,
complained that Democrats on the panel insist on replacing some
of those spending cuts with new revenues in an effort to "bust"
current limits on spending.
"Republicans are saying, how about some vetted entitlement
reform? We're not going to replace spending cuts with revenue,
so we're stuck," Graham said.
The South Carolina senator said the White House is "more
open-minded" about finding some savings to "entitlement
programs," which normally refers mostly to Social Security,
Medicare and Medicaid retirement and healthcare programs for the
elderly and disabled.
"Frankly, I think the White House is in a much more
reasonable place about some small entitlement changes" to
replace some of the automatic spending cuts, Graham said, adding
that President Barack Obama should come forward with some
proposals to advance the talks.
A Senate Democratic aide, however, said Obama has long
insisted that any cuts to federal benefits be coupled with
revenue increases and that Democrats have seen no sign of him
backing away from that requirement.
Besides the Dec. 13 deadline for the committee to finish its
work, Congress faces a Jan. 15 date when current funding runs
out for many federal programs, as well as a Feb. 7 deadline for
again raising Treasury's borrowing authority.
Democrats circulated on Thursday a list of tax breaks for
the wealthy and big companies that they want to close for
estimated 10-year savings of $264 billion. While some of these
might not be proposed in the talks, the list makes clear that
Democrats believe they can win public support by targeting tax
breaks that they can portray as subsidies for the rich.
Among these are ending deductions for vacation homes, yachts
and corporate jets, which they claim would save as much as $19
billion over 10 years, according to the list obtained from a
Democratic aide. The list also includes ending a break that
allows hedge fund manager and private equity adviser income to
be taxed at the lower capital gains rate, a $17 billion savings
over 10 years.
The panel should "look at those tax expenditures that
largely reward American business for doing business overseas,"
said Senator Ron Wyden, a Democratic panel member. "That's where
I'm looking first, and that's where I have seen the most
opportunity for common ground."
But several Republicans expressed frustration with
Democrats' insistence on higher tax revenue in negotiations to
"They're denying the reality that they're not going to get a
tax increase," said Senator Ron Johnson, a Republican on the
Republican Representative Tom Price, a House member of the
panel, said he did not sense the two sides were at an impasse.
"I'm cautiously optimistic," the Georgia congressman said,
adding he saw potential for common ground on reforming the
multi-layered U.S. tax code.
Price told Reuters in an interview the panel could set up a
process for tax reform that would be carried out later by the
House Ways and Means and Senate Finance committees.
"I think a process for fundamental tax reform would be
extremely wise," he said. "Having specific tax reductions or
increases in the budget agreement, I think is highly unlikely."
Senate Budget Committee Chairwoman Patty Murray, the panel's
Democratic leader, declined to comment on the status of the
talks, saying that an agenda for the next public meetings on
Nov. 13 had not yet been announced.