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Originally published Saturday, October 29, 2011 at 8:02 PM

State delegation full of ideas for deficit-reduction panel

The bipartisan deficit-reduction supercommittee isn't lacking for ideas on how to lower the red ink. Like many of their colleagues, members of Washington state's congressional delegation have offered suggestions to the panel.

Seattle Times staff reporter; McClatchy Newspapers

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WASHINGTON — U.S. Rep. Jim McDermott, D-Seattle, would jack up the income-tax rate for billionaires from 35 to 49 percent, slap new taxes on large banks and do away with tax-exempt municipal bonds.

U.S. Rep. Rick Larsen, D-Lake Stevens, suggests lifting the cap on Social Security payroll taxes for higher-wage workers, collecting more taxes from oil and gas companies and reducing federal crop subsidies for farmers.

Freshman U.S. Rep. Jaime Herrera Beutler, R-Camas, would start by giving the president, the vice president and all members of Congress a 10 percent pay cut, saving $10 million from the federal payroll.

Those are among the ideas members of Washington state's congressional delegation have offered as the deficit-reduction "supercommittee" in Congress tries to identify ways to shrink the federal deficit by at least $1.2 trillion over 10 years.

The 12-member bipartisan panel, co-chaired by Sen. Patty Murray, D-Wash., has until Nov. 23 to pass a plan.

Panel members have been largely mum about their deliberations the past two months. But some fellow lawmakers and advocacy groups haven't been so reticent, trying to sway the committee through letters and petitions on how to lower the red ink.

Like most members of Congress, though, the Washington state delegation has more ideas about what not to cut than tough proposals to curb spending. Democrats are largely on the hunt for new revenue, and many of the specific cuts that have been suggested look small compared to the committee's goal.

Three of the state's four GOP House members did support a Republican budget plan for fiscal 2012 that would have cut nearly $6 trillion over the next decade, scaling back Medicaid and overhauling Medicare. It passed the House in April but didn't get a vote in the Senate. Rep. Dave Reichert, R-Auburn, did not vote.

Military spending

With Washington state heavily dependent on military spending, some lawmakers say reductions to the Pentagon budget would be particularly disastrous, leading to big job losses.

In an 11-page letter to the deficit panel this month, Rep. Norm Dicks, D-Bremerton, warned of grim consequences if members can't reach a deal. That would trigger a 10-year, $1.2 trillion, across-the-board cut split between defense and nondefense budgets.

One result, Dicks noted: More than $2 billion cut from military-construction accounts, hurting the struggling building industry.

Dicks, the top Democrat on the House Appropriations Committee, wants the supercommittee to take a "balanced" approach, which means including new revenues. He pinpointed no areas for cuts.

Likewise, Rep. Adam Smith, of Tacoma, ranking Democrat on the House Armed Services Committee, was blunt about the need for new taxes. He urged the supercommittee to keep defense off-limits to further cuts. Smith acknowledged that would shift all the cuts to education, health care and other nondefense programs — a blow he said should be offset with more income.

As a long-term budget fix, "spending will have to come down, and we're going to have to generate new revenues," Smith told colleagues on the Armed Services Committee last week.

Virtually every Republican in Congress opposes raising taxes. But Republicans have other ideas for generating income for the Treasury.

Republican Rep. Doc Hastings, of Pasco, wants to drill for more oil and sell surplus facilities and nonessential federal lands. Hastings, chairman of the House Natural Resources Committee, told the deficit panel it could "create tens of thousands of jobs and generate hundreds of billions in new government revenue" by developing oil and natural-gas supplies in Alaska's Arctic National Wildlife Refuge.

Rep. Cathy McMorris Rodgers, R-Spokane, would like to see the supercommittee stick close to the House GOP budget proposal that, among other things, would repeal President Obama's health-care overhaul and turn Medicare into a voucher system in which seniors shop for private insurance.

Even Murray has penned a letter to the deficit panel, formally called the Joint Select Committee on Deficit Reduction. Writing in her capacity as the chairwoman of the Senate Veterans Affairs Committee, she said the nation should not balance the budget "on the backs of America's veterans."

Nonetheless, Murray tossed in five modest proposals for savings on veterans' programs. One idea: for wartime pensions and other benefits pegged to incomes, cross-check with the IRS to verify that the recipient is eligible. That would save an estimated $57 million over five years.

Murray also suggested rounding down to the nearest dollar annual cost-of-living increases for veterans' disability compensation and delaying the increase for one month.

Projected deficit

According to the Congressional Budget Office, the projected budget deficit for fiscal 2011 alone, which ended Sept. 30, is $1.3 trillion.

The supercommittee was created out of Republican demands as part of a deal in August to lift the federal debt ceiling. The agreement caps future spending to rein in the deficit by about $900 million over 10 years, and puts the supercommittee in charge of finding ways to lower it by additional $1.2 trillion.

Rep. Jay Inslee, D-Bainbridge Island, who is running for governor in 2012, has sent three letters to the supercommittee, including one on protecting spending on clean energy and another on access to lifesaving drugs for Medicare patients. But Inslee gave no advice on how to bridge the gulf between taxes collected and federal outlays.

Reichert, who sits on the House Ways and Means Committee that has oversight of tax and health-care issues, has said almost nothing publicly about where to make big cuts.

But his spokesman, Charles McCray, said Reichert "has the opportunity to provide input" to Rep. Dave Camp, R-Mich., the chairman of the Ways and Means panel who is one of six House members on the supercommittee.

McCray would not say what Reichert has shared with Camp.

Washington state's junior senator, Maria Cantwell, has offered few concrete ideas publicly about how to trim the deficit. Like most other Democrats, she has insisted that it shouldn't be done solely through spending cuts.

The Congressional Progressive Caucus, on the other hand, is brimming with ideas about ways to bring in more money to the Treasury.

The caucus is made up of 75 most-liberal House members, including Seattle's McDermott, plus Sen. Bernie Sanders, I-Vt. It has tallied more than $6 trillion worth of revenue, ranging from ensuring that Bush tax cuts expire to new taxes on derivatives trading and speculative financial products.

Kyung Song: 202-662-7455 or ksong@seattletimes.com

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