A "Gang of Eight" begins three days of meetings Tuesday at Virginia's historic Mount Vernon to discuss a grand bargain that could stop the country from driving off of the so-called fiscal cliff.
Democrats including Virginia Sen. Mark Warner, Colorado Sen. Michael Bennet, Illinois Sen. Dick Durbin, and retiring North Dakota Sen. Kent Conrad will meet with Republicans Georgia Sen. Saxby Chambliss, Idaho Sen. Mike Crapo, Oklahoma Sen. Tom Coburn, and Nebraska Sen. Mike Johanns to hammer out a deal that they hope will both increase revenues and cut the deficit.
Without a comprehensive agreement, Bush-era tax cuts are set to expire and $1.2 trillion in automatic budget cuts are slated to go into effect at the beginning of the new year. The cuts are a result of failed "super committee" negotiations last summer that led the 12 members of the committee to raise the debt ceiling under the pretense that Congress would shave $1.2 trillion from the federal budget. Unless Congress can spell out the terms of those cuts, they will be automatic
However, Tuesday, the Senate's third-ranking Democrat, New York's Chuck Schumer, complicated the "gang's" efforts.
Schumer offered up his own vision of a grand bargain, which was devoid of the traditional negotiating staples.
In the past, Republicans and Democrats have laid out compromises that consisted of both lowering tax rates across the board and cutting entitlement programs.
Instead, Schumer announced he is ready to play ball on entitlement reform, but only if Republicans are open to maintaining current tax rates for middle class families, raising the rate for those making more than $250,000 a year, and revising loopholes in the current tax structure to raise revenue.
"The lure for Republicans to come to the table around a grand bargain should be the potential for serious entitlement reform, not the promise of a lower top rate in tax reform," Schumer said during an event at the National Press Club.
Schumer avoided specifics, but says he envisions a comprehensive deal that would do away with loopholes that benefit higher-income Americans and would increase the capital gains tax. While Republicans have said they'd like to see tax rates for the wealthy remain at 35 percent, Schumer outlined a tax plan where the richest Americans would pay Clinton-era rates of 39.6 percent.
Schumer's plan flies in the face of current negotiations that pivot off of the 1986-era deal Congress made that resulted in lowered tax rates across the board. Schumer says he has talked with the "Gang of Eight" about his proposal, but says the group has not endorsed it.
"The old style of tax reform is obsolete in a 2012 world," Schumer says. "It doesn't fit the times because there are two new conditions that didn't exist in 1986 and are staring us in the face today: a much larger, more dangerous deficit, and a dramatic increase in income inequality. Old-style tax reform could make both conditions worse."
With four weeks to go until Election Day, Schumer reinforced President Barack Obama's position that the richest Americans must be taxed more to make up for the deficit.
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Schumer's optimistic that if the "Gang of Eight" gets a more modern framework, Republicans and Democrats can negotiate a deal when they return for their lame-duck session in November.
"I absolutely believe that a deal can be had before January 1," Schumer says. "There is a genuine agreement that people want to come to a deal."
House Speaker John Boehner, who will be tasked with getting the most conservative cohort of his party on board to pass a grand bargain, said last week that he's not confident it's even possible.
"I'm not sure it's the right thing to do—have a lot of retiring members and defeated members voting on really big bills," Boehner said.