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Group of Eight Senators Meets to Work on Deficit-Cut Plan

Oct. 9 (Bloomberg) -- Bloomberg's Megan Hughes reports on the "Gang of 8" working in private towards a solution to the United States fiscal cliff and an updated forecast from Goldman Sachs on the potential impacts of the fiscal cliff. She speaks on Bloomberg Television's "In The Loop."

A bipartisan group of eight U.S. senators is meeting this week to seek a way to avert a year-end “fiscal cliff” of expiring tax rates and automatic spending cuts.

The group will hold three days of meetings starting today at Mount Vernon in Virginia. Two Senate aides close to the group said the lawmakers will seek to identify broad areas of agreement on taxes and entitlement programs, without discussion of specific numbers or targets.

The meetings continue a series of gatherings by members of the U.S. Senate over the past year and a half. They include Democrats Mark Warner of Virginia, Dick Durbin of Illinois, Michael Bennet of Colorado and Kent Conrad of North Dakota, and Republicans Saxby Chambliss of Georgia, Mike Johanns of Nebraska, Tom Coburn of Oklahoma and Mike Crapo of Idaho.

When lawmakers return to Washington in November for a post-election session, they will have only weeks to avert more than $500 billion in tax increases and $100 billion in automatic spending cuts set to take effect in January. The group wants to have a series of options available after the election, the aide said.

While the Senate group’s most ambitious goal is to agree to a framework for changes to curb the U.S. budget deficit, it is unlikely they will announce specific proposals before the Nov. 6 election, said one of the Senate aides. Separately, Senator Lamar Alexander, a Tennessee Republican, is working with Bennet on a proposal to offer Senate and House leaders after the election.

Uphill Battle

The group faces an uphill fight to win support from Senate leaders for any recommendations it makes. Democrats oppose changes to entitlement programs such as Medicare, while Republicans refuse to accept tax increases.

In the House, the hurdles are even greater. Speaker John Boehner, an Ohio Republican, said last week he is reluctant to back a major deficit-reduction deal during the lame-duck session.

Even so, some members of Congress have expressed optimism that a framework for an agreement can be reached if President Barack Obama is re-elected and Democrats retain control of the Senate.

“It’ll be a big incentive to sitting down and trying to come up with something that’s balanced, that has to have revenues,” Senator Jack Reed, a Rhode Island Democrat, said in an interview last week. “It’s going to be complicated, but I hope the message coming out of the election is ‘let’s get this done.’”

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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