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Some optimistic signs on the debt committee

There were two bits of interesting budget news yesterday. First, there were cryptic comments by House Minority Leader Steny Hoyer (D-Md.). The Hill quotes Hoyer as saying:

We don’t want to raise taxes, and we don’t have to raise taxes. . . . We don't have to raise rates, we have to make sure everyone is paying their fair share.

He also went on to ding President Obama for not embracing the Simpson-Bowles plan.

What’s going on here? Republican House sources caution not to get overly excited about a Democratic capitulation on tax hikes. Hoyer appeared to be making a distinction between raising rates and closing loopholes. Remember: Democrats have convinced themselves that loopholes are “spending through the tax code.” But the intent here is still to increase taxes, just not the marginal rates. This won’t fly with the House Republicans. From their perspective a tax hike is a tax hike. Nevertheless, if the tax base is broadened and rates are lowered in the form of comprehensive tax reform, there may be the basis for a deal.

It is far from clear, however, that tax reform could be done within the confines of the joint debt committee that has only a few months to complete its work.

The other interesting development was the appointment of Mark Prater as the staff director for the committee. Prater currently works as the Republicans’ deputy staff director for the Senate Finance Committee. His role is a limited one, however. A source close to the committee tells me that we shouldn’t anticipate a “one-man show” and that Prater’s duties are as much organizational as substantive. His expertise in tax and entitlement reform, however, holds promise for progress in those areas.

Perhaps the dynamic of the committee, the separation from the shrillest voices in each body and the prospect of across-the-board cuts will help forge a deal. Nevertheless, it’s hard to figure out how to get to $1.2 trillion, given the enormous ideological divide between the parties.

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