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Will GOP, Democrats Come to Debt Compromise?

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    National Journal congressional correspondent Major Garrett on potential debt deal

  • Duration 7:00
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Yes.

-- folks we are back in an action at Fox News alert in congress we've got two big developments right now the effort to reach a deal.

I'm cutting America's debt with less than four days to the president's Friday deadline.

A bipartisan group of senators has just released the outlines of a big new plan.

They involves trillions in budget -- and also a major overhaul of the tax cut.

Plus we're also waiting for a key vote in the house and that would be on the planet has known as cut cap and balance -- -- government to balance its budget every year.

It limit spending to 20% of the gross domestic -- -- And it also requires a three fifths supermajority.

To raise taxes now Republicans say that they believe they have enough votes in the house to pass after the president just came out moments ago.

I spoke to reporters at the White House he says that's gonna be no DL at Atlanta on his desk he will veto that.

And he sounded very much like he was getting behind this new plan from the -- -- yes.

The good news is that today.

A group of senators the gang of six.

Democrats and Republicans I guess -- game seven because.

One additional Republican senator added on put forward a proposal.

That is broadly consistent we have the approach that I church.

What it says it is we've got to be serious about reducing discretionary spending.

Both in.

Domestic spending and defense.

We've got to be serious about tackling health care spending.

And entitlements in a serious way and we've got have some additional -- So that we have an approach in which there is shared sacrifice.

And everybody.

Is giving up something.

All right national national journal's Major Garrett is here with us it's great to have -- lock on great to be with you good to see major -- He ended this interest in the president was not expected to be at that news conference little while ago I and then we got word yes he had a statement to make.

He seems to be getting behind.

The work of this this gang of six or seven at Lamar -- part of it now.

What is it what is this plan.

Well there many components and there about fifty senators who went to a meeting this morning on the senate who look like they're rare instance this of course in the said he needs sixty votes to get anything done they may have sixty votes for this.

Right now this looks like.

Kind of panic situation we look at the wall says in case -- -- -- -- break glass well they're trying to break the glass look at this plan let's talk about taxes for second that's a huge issue.

This would collapse -- six rates currently running from 10% to 35% to three rates.

The exact rates are determined eight to 12% fourteen point 2% twenty to 29% -- be lower rates for everyone in that plant.

But also get rid of the Alternative Minimum Tax.

But we're also impose higher costs on those who receive Social Security benefits and push people in higher tax brackets.

But doing something with realigning the consumer product index the change CPI -- lot of changes in there.

500 billion dollars in spending cuts in the next.

Five to ten years and then unspecified entitlement cuts later no structural reforms of Medicare and Medicaid and if you change -- security.

Those savings go entirely to preserving solvency.

Not deficit reduction.

So they'll be things on the left that they won't like them things on the right they don't like.

-- it out it's a -- and cut tax tax cut but there's also within their tax increase -- so this might pass the senate bottom line at.

By the you have a very.

Lot of owners have very difficult time it would be problematic in the house because this is a brand new proposal house Republicans haven't endorsed it they have a completely different plan that's much -- to witness.

App is it isn't though isn't part of the revenue increase in -- a change in the corporate tax structure and also eliminating some of these -- because -- been a lot of Republicans and you know Charles Krauthammer -- you know just outside thinkers among them who say you know why not just allow these -- to if you didn't.

Get rid of these loopholes some of these corporations will have an increase in revenue the government will get increased revenue because the tax is a lot.

The current corporate tax rate is about 35 -- this would lower to between 2329%.

And it would get rid of some tax loopholes probably the most egregious ones -- once heard about.

And it also says he would change the structure for mortgage deductions and charitable deductions not eliminate those but change -- make them less generous probably less generous for the wealthy.

So -- alterations in the tax code there.

A lot of these details have yet to emerge right now they're theoretical.

Until people see the actual financial and it -- -- number one.

Saying that each side would be yelling and screaming about a missed the once they get a better handle on what's well the left will not like this -- -- CPI.

Alteration is it will change and reduce Social Security benefits in this plan they have a five to ten year.

Bumper or some buffer to protect current Social Security recipients the left me not like that they made out like the fact that incorporates go down an individual rates go down.

And there's not a higher tax component the right may not like the changes to get rid of some of the tax deductions mortgage interest charitable we don't know the details on that.

And the process reforms.

Are to be dealt with later.

And Republicans want process reforms now they want the emphasis on.

The bias and federal government away from spending and they want that up front because they're afraid you enact anything now raise the debt ceiling.

68 months later you're given a promise.

A process for which may not I'll never pans out and then -- into the next election and I and the reason John Boehner backed away from the big deal was because he was also a two step process on tax reform tax reform is also a secondary part of this calendar.

And one of the things you learn legislative politics is out.

Baked in the cake rather -- navigate what you sign on for originally is what you end up with what -- -- later you may not yet.

But -- -- ask -- this -- -- PR for the president on this.

You know is this something that he can look good on one of the one of the -- initial questions that came out of a news conference with well is this now the president's plan because the president has been so criticized for not having a plan -- not presenting a plan to the American people.

Is he now signing on to this this is.

And he's giving -- -- and courage and of course the president doesn't have a plan he's looking for that in case of emergency.

Break glass too because he doesn't have a plan never has had one he put together a budget which only lasted about a month.

-- the shortest shelf lives I've ever seen for presidential budget in Washington so he has been.

Backtracking in this debate throughout but I -- in the last two weeks he said look I'm willing to go big.

It's -- politics won't go and follow me that I not to blame and within the perception the public he's gained in the last couple weeks.

But the bottom line is this deficit I mean the default has to be avoided.

That's -- has to be raised and right now this is a promising program proposal that is a sixty votes and defend.

When I quiz and the kind of plan to be the backup plan says sound like there's going to be some kind of deal here and that -- US markets up.

A 186 points right now this kind of news encourages market because it gives them two options that one.

Major thank you so much great to see you my pleasure -- National Journal.

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