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Fiscal cliff: Will GOP put taxes on the table to avoid blow to economy?

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“If Republicans won’t work with us on a balanced approach, we are not going to get a deal,” said Senator Murray,  chairman of the Democratic Senate Campaign Committee, in her speech. “[I]f we can’t get a good deal – a balanced deal that calls on the wealthy to pay their fair share – then I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle-class families under the bus.”

New taxes – the “balance” Democrats are seeking in addition to lower spending – are, as Toomey put it, “anathema” to Republicans.

But Toomey had, famously, offered Democrats higher tax revenue during 2011 negotiations aimed at heading off the budget-cutting sequester. They were rejected, Toomey said, because Democrats wanted more. By bringing forward that proposal again on Tuesday, Toomey attempted to short-circuit Democratic attacks that claim Republicans are both ideologically rigid in their approach to higher taxes and willing to make the middle class bear the brunt of any budgetary changes.

The sequester, or the automatic spending reductions mandated by the Budget Control Act, is the result of compromise legislation that ended last summer’s debt-ceiling fight. That legislation increased America’s loan limit in exchange for imposing spending caps on the next 10 years of federal budgets and creating the “sequester” to slash government spending by a predetermined amount (about $1.2 trillion over the next decade) even further if Congress couldn’t agree to deeper cuts. Toomey was one of six Republicans assigned to the so-called “supercommittee,” a bipartisan group of 12 lawmakers tasked with finding $1.5 trillion in debt reduction over the next decade.

The group couldn’t find a formula for offsetting those reductions, and so they’re slated to hit the economy as automatic spending cuts come Jan. 1.
 
But before they announced failure, Toomey offered a plan to offset the $1.2 trillion including $250 billion in new tax revenues coupled with changes to individual tax reform that cut marginal tax rates by 20 percent for every tax bracket. That was alongside changes to Medicare creating higher tax receipts ($150 billion) and $100 billion in non-tax revenues like user fees and asset sales for a total of $500 billion in net deficit reduction.

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