Factbox: What's on the table in debt talks
Jul 8, 2011, 4:02 a.m.
- Ending subsidies for ethanol producers. Senate Republicans have voted twice to end this break, which would save roughly $6 billion per year.
- Repealing tax breaks for big oil companies. Republicans defeated this proposal in the Senate, but Democrats say they will push to include it in the deficit-reduction plan, saving $45 billion, according to Obama's proposal.
- Imposing normal income-tax rates of up to 35 percent on hedge fund managers, who now pay the 15 percent capital-gains rate on their compensation, which they claim as "carried interest." This would yield $20 billion.
- Repeal the "last in, first out" accounting method, which the White House says is used by oil companies and other commodities firms to shield trading profits. Republicans say it would hurt hiring. This would raise $70 billion.
- Eliminating preferential tax treatment of corporate jets, which enjoy a quicker depreciation path than commercial airlines. This saves a more modest $3 billion but gives Obama an excellent punching bag when he wants to highlight what he says is the sort of extravagance that Republicans are protecting.
The cost of the government's healthcare bill to the deficit is projected to nearly double over the coming 10 years, driven by an aging population and medical costs that are outpacing inflation. Republicans have proposed dramatic changes to both the Medicare program for the elderly and the Medicaid program for the poor. Democrats won't agree to major changes in this hot-button area, but relatively modest savings could be possible. Democrats put the total savings at $200 billion, Republicans put the total at $400 billion.
Possible savings include:
- Better coordinate coverage of "dual eligibles," people who qualify for both the Medicare plan for the elderly and the Medicaid plan for the poor, who account for a disproportionate amount of the government's health spending.
- Reduce Medicare benefits for wealthy retirees who can afford their own health coverage. Many Democrats worry this could lead to an erosion of public support for the program.
- Change the way the federal government provides Medicaid money to states that administer the program, rewarding those that spend the money more efficiently.
- Reduce medical fraud and overpayments.
Senate Democratic leaders want to include measures to perk up the sluggish economy and bring down the unemployment rate, which remains at a stubbornly high 9.1 percent. These measures would add to budget deficits in the short term and Republicans have shown no willingness to include them in the deal.
Among the Democrats' proposals:
- Extend a payroll tax cut for employees that expires at the end of this year. This would worsen budget deficits by $112 billion over 10 years.
- Increase spending on highway repair and other transportation projects.
- Give subsidies to emerging "clean energy" industries.
(Reporting by Andy Sullivan and Alister Bull; Editing by Paul Simao and Eric Beech)