Sen. Jack Reed dropped in for coffee this afternoon, arriving with a reasonable amount of faith that some of the heaviest lifting required to avert the so-called fiscal cliff at year’s end will be possible in the lame-duck session after Election Day.
“At a minimum,” Reed said in a session with reporters and editors at Bloomberg’s Washington bureau, Congress should be able to avoid the mandatory cuts in defense and other areas threatened under sequestration and come to grips with expiring Bush-era tax cuts. At the same time, he said, it will be critical to extend expiring unemployment benefits, still critical for stimulus in an economy that still requires it.
The senior senator from Rhode Island, a Democrat in a caucus that hopes to maintain its control of the chamber on Nov. 6, said: “The caucus is very clear about the tax cuts for the upper-income.” Those, he said of the Bush-era cuts for the wealthiest Americans, “aren’t going to be extended.” He is comfortable with a $250,000 per-household cutoff in earnings for keeping the cuts. For most people, he said, “that is a huge amount of money.”
Protecting defense from damaging cuts — says the West Point graduate with a law degree from Harvard and more than two decades in Congress — will require some new revenue in the mix. “The key to a lot of this is whether revenue is on the table,” he said.
Reed also suggests that once lawmakers start looking at tax exemptions for elimination, they will have to start thinking about the tax rates. It’s more complicated than people realize, he says. Is anyone interested in eliminating the exemption for employer-paid health insurance, he asks, or, at a time when the housing market is only starting to recover, eliminating the exemption for home mortgage interest payments?
And when it comes to a longer-term mix of tax revenue and spending cuts, Reed also suggests that the roughly 3-1 ratio of cuts to revenue that former Sen. Alan Simpson and ex-White House chief of staff Erskine Bowles proposed is a starting point. Looking at their 25 percent tax to 75 percent spending cut mix, Reed says, that 25 probably will have to be pushed up “a bit.”
The outcome of the election will have a lot to do with all this, he notes.
The message he’s hearing from voters: “Let’s get this done.”