A revenue increase of at least $1 trillion over 10 years and “significant” spending cuts could form the framework of an agreement to avert the fiscal cliff, said Senate Finance Committee Chairman Max Baucus.
“If there is substantial revenue, over $1 trillion, and significant spending cuts, we are close to getting a deal,” Baucus, a Montana Democrat, said today on Bloomberg Television.
An agreement must include higher tax rates for top earners to generate the needed revenue, Baucus said. The top rate, he said, doesn’t necessarily have to return to the 39.6 percent level it would reach if Congress doesn’t act.
Baucus, whose committee has jurisdiction over tax policy and entitlement programs, spoke today as Treasury Secretary Timothy F. Geithner was shuttling between the offices of congressional leaders.
House Speaker John Boehner, an Ohio Republican, said earlier today that no substantial progress has been made on averting the cliff, composed of more than $600 billion in automatic spending cuts and tax increases scheduled to take effect in January. Boehner said President Barack Obama hasn’t been serious in offering spending cuts.
Lawmakers are divided over how to avert the cliff and replace it with longer-term policies to reduce the budget deficit. Democrats say higher tax rates must be part of a deal, while Republicans resist tax rate increases and insist on major changes to programs such as Medicare and Medicaid.
Baucus said proposals to limit tax deductions to a percentage of income would be “easier” than placing a flat dollar cap on deductions.
“There may be some middle ground there,” said Baucus, 70. “The more both sides explain the numbers, the American people can help us decide what they want and do not want.”
Like the administration, Baucus pointed to Obama’s budget proposal for examples of spending cuts that Democrats could accept.
Baucus, first elected to the Senate in 1978 and up for re-election in 2014, said he was “hopeful” that Congress would reach an agreement.
“I think this is the early stages,” he said. “There is still time left. Both sides are trying to position themselves a little bit.”