During Monday’s speech, Mr. Baucus said he was working on a tax reform proposal that both sides could support but offered no details. The goals, he said, would be to help create jobs and promote “broad-based growth.”
Dozens of senators, including Tom Coburn, a Republican from Oklahoma and outspoken fiscal conservative, and Charles E. Schumer, New York Democrat, met privately over the past week to continue trying to forge a bipartisan compromise on long-term deficit reduction.
They heard from Robert B. Zoellick, outgoing president of the World Bank, and William C. Dudley, president of the Federal Reserve Bank of New York, who said that if the European crisis spirals out of control it could throw the U.S. economy back into a deep recession.
Senators seemed to emerge from the meeting with a new sense of urgency, but they offered few details on how to bridge the divide between the two parties both on extending the Bush tax cuts and long-term deficit reduction.
Sen. Bob Corker, Tennessee Republican, called the message from Mr. Zoellick a “defining moment” for debt negotiations in Washington after a year and a half of partisan impasse and said he is drafting legislation to tackle both entitlements and tax policy - legislation he hopes will serve as a template for ongoing discussions.
But Sen. Joe Lieberman, a Connecticut independent who is retiring this year, best captured the bottom line.
“There’s a real sense that Europe’s economy is in a deep crisis and if it slides further it will drag down the United States even more,” he said after the meeting. “Everyone seems to know that. The question is whether we’ll have the guts to do anything about it.”
Still, any deal - either on the Bush tax cuts or a longer-term tax overhaul - must get through the Republican-controlled House, where many conservatives are dead set against changes that would give the government more room to spend.
“While I generally support tax reform and getting rid of loopholes, I would have to see what loopholes we’re talking about,” said Rep. Joe Wilson, South Carolina Republican. “One person’s loophole is someone else’s livelihood.
“I’m not here to increase federal revenue.”