Sessions: Dem tax demands killing debt deal

Democrats' insistence on raising tax revenues has stalled progress on an agreement to reduce the deficit and raise the debt ceiling, according to Sen. Jeff Sessions, the top Republican on the Senate Budget Committee,

Appearing on CBS' "Face the Nation," Sessions said President Obama has in the last few days "seemed to open up to the possibility of long-term debt fix, but it looks like now that that's fallen apart based on demands for higher taxes."

Republicans have insisted on creating a deficit and debt reduction plan as a condition of voting to raise the debt ceiling - the amount of money that the U.S. government is technically allowed to borrow.

Mr. Obama has been seeking a deal of both spending cuts and increased revenue that includes $4 trillion in budget savings over the next decade, but House Speaker John Boehner said on Saturday that a mid-size package of reforms that does not include any kind of increase in taxes on anyone is the only politically viable solution.

Treasury Secretary Tim Geithner said earlier today on "Face the Nation" that the president is still pushing for the largest deal possible.

Mr. Obama and his economic team have repeatedly warned of catastrophic consequences for the U.S. and the global economy if Congress does not increase the $14.3 trillion debt ceiling by August 2. Geithner said today that leaders must reach a deal by the end of next week.

Sessions warned that Congress may not readily accept whatever agreement the president works out with congressional leaders behind closed doors.

"We're not just going to ratify some secret deal even if our good leaders plop it down on the floor of the Senate," he said. "We need at least seven days to review something as historic as this. I'm really worried about all of that. I really believe we need a national discussion."

Additionally, Sessions took issue with Geithner's remarks that Republicans should allow for some increased revenues as part of the deal. (Geithner said that it was both irresponsible and unfair to only rely on cuts in government spending to reduce the budget deficit, as it would unduly burden the middle class and the poor.)

"Absolutely that is is not correct," Sessions said. He pointed to increased spending in recent years as the government's problem - in discretionary non-defense spending, defense spending and spending in entitlements like Medicare and Social Security.

"You can make big reductions in spending without cutting spending," he said, just by "reducing the growth rate of spending."

Also appearing on the program, Sen. Bill Nelson, a member of the Budget Committee, countered that Social Security doesn't need to be part of the president's deficit reduction deal with Congress.

"Even if you touch Social Security, that's not going to help in this next decade to get the deficit reduction that we need," said the Florida Democrat.

While Sessions cited increased spending as the source of the nation's rising deficits, Nelson pointed to a fall-off of revenues from tax loopholes and the Bush-era tax cuts.

"There are lots of ways to get additional revenue by eliminating some of these tax preferences for special interests called tax loopholes," he said.

Closing tax loopholes would generate more revenue, even if the savings were used to lower tax rates, Nelson said.

"What you'd have is a revenue-neutral position, but because you would simplify the tax code, you would end up raising more revenue because it would spur up the engine of economic growth," he said.

"That's a great position, I would support that," said Sessions. "But that's not what the Democratic Senate budget that has been revealed partially to us does. It increases taxes by reducing these loopholes and increases other taxes and actually spends the money rather than using it to reduce rates. That's not acceptable."