While Congressional Republicans have claimed tax increases are off the table, Democratic leaders are floating an idea of increasing tax revenues by $1 trillion by closing loopholes and other changes to the tax code.
From The Hill:
Democrats say they want to raise as much as $1 trillion in new revenues through tax reform later this year to balance Republican demands to slash mandatory spending.
Democratic leaders have had little time to craft a new position for their party since passing a tax deal Tuesday that will raise $620 billion in revenue over the next 10 years.
The emerging consensus, however, is that the next installment of deficit reduction should reach $2 trillion and about half of it should come from higher taxes…
The White House also supports a 1:1 ratio of spending cuts to tax increases as Congress seeks to finish the fiscal work left unresolved by the recently completed 112th Congress.
For the Republicans any changes to the tax code, even just closing loopholes, have to be revenue-neutral which means that any additional revenues gained from the changes should be used to lower rates not pay down the deficit. So $2 trillion in pure cuts is preferable to Republicans (if none of those cuts are to the military).
The battle lines are being drawn for the next few fights; debt ceiling, continuing budget resolution, and the “fiscal cliff” deal cuts that were punted for two months.