'Supercommittee' deficit talks stalled

The "supercommittee" appears to have hit an impasse, though talks continued behind closed doors Wednesday after Democrats rejected the latest Republican offer and the committee faces a Thanksgiving deadline to strike a deal for a $1.5 trillion reduction in the national deficit.

The Republicans proposed raising some tax revenue by closing loopholes in exchange for permanently pushing down income tax rates for the wealthiest households and others.

Republicans portrayed their offer as a significant development because they were willing to stray from their no-new-taxes stance and put revenue on the table. Most Republicans have signed an anti-tax pledge with activist Grover Norquist's Americans for Tax Reform that they are reluctant to break, and GOP leaders have resisted Democrats' insistence that taxes make up a portion of any deficit-cutting package.

Democrats said the GOP's $1.2 trillion figure was unrealistic, as the cost of the new tax breaks would far exceed the $250 billion in estimated new revenue from capping or eliminating some itemized deductions.

Sen. John Kerry (D-Mass.), who attended the meeting late Tuesday, told the Republicans their offer of new revenue was insufficient. Democrats have sought a $3 trillion package equally split between spending cuts and new revenue, which they characterize as a balanced approach. That proposal would raise more than $1 trillion in new tax revenue largely by targeting wealthier households.

Democrats said Republicans must come forward with a more substantial revenue proposal. But Republicans aides said it was up to Democrats to put the next offer on the table. The "gang of 45" senators -- Republicans and Democrats -- who support a broad deficit-cutting deal were preparing to send a note to the supercommittee reminding the panel of their preference for a larger package.

"We're hoping it will go past $1.2 trillion or $1.5 trillion to $4 trillion," said Sen. Richard Durbin (D-Ill.), one of the original "gang of six" senators who tried unsuccessfully earlier this year to forge a deficit-cutting deal of that size.

"It sounds counterintuitive," Durbin conceded, but "I think bigger is easier." Budget hawks have pushed the committee to try to achieve a larger deficit-reduction package, saying it could be easier to find common ground among the partisan differences if all aspects of federal tax and spending were on the table.

The committee's failure to reach its Nov. 23 deadline could upset the financial markets and lead to another downgrade of U.S. credit. It also would trigger mandatory spending cuts to defense and domestic accounts in 2013 that lawmakers from both parties are trying to avoid.