With two weeks left to reach a deal, Republican members of the supercommittee are offering to increase tax revenue by nearly $300 billion dollars in what GOP aides say is a "significant concession" to Democrats.
Senator Pat Toomey (R-PA) laid out the proposal during a meeting Monday night with Sens. Rob Portman (R-OH), John Kerry (D-MA) and Max Baucus (D-MT), and Reps. Chris Van Hollen (D-MD), Dave Camp (R-MI) and Fred Upton (R-MI).
Republicans say the new revenue would come from limits on itemized tax deductions. The money captured from the tax overhaul would be used to lower the top individual tax rate to 28 percent and toward deficit reduction, aides say. Republicans also want to make the Bush tax cuts permanent.
The breakdown, according to aides: $250 billion from limits on itemized tax deductions, such as the mortgage interest deduction on second homes, and about $40 billion in money the government would save by changing the way it calculates who qualifies for government benefits ("chained CPI").
Until now, Republicans have proposed only non-tax related revenue measures such as spectrum sales and increases in FAA fees.
As headlines started to trickle out today that Republicans were offering a tax increase proposal to break the supercommittee impasse, Democrats on the committee hit back hard.
Kerry told reporters this afternoon he saw a slight change from Republicans but it wasn't nearly enough.
"They're anxious to promote a certain concept with all of you. But I'll be very clear that whatever they've put there doesn't get the job done. We've got some distance to travel. We're working very hard to do that. I dont want to go into the details," he said.
A Democratic aide with knowledge of the GOP offer called their ideas "ludicrous"
"This is another effort for them to spin that they are being reasonable, but what they've put on the table is so insanely unreasonable that I actually think it moves the ball in the opposite direction," the aide told NBC News.
"It's devious, because it looks in some respects reasonable on the surface, but it's a totally unreasonable proposal."
According to the aide, in order to raise $300 billion in tax revenue and lower the top individual tax rate to 28 percent, you would need to "decimate all tax expenditures" and increase taxes on capital gains and dividends, something he doubts Republicans would support.
It's unclear whether the $300 billion would be part of a deficit reduction deal with overall savings north of $2 trillion, or, more likely, a minimum package of $1.2 trillion in deficit reduction. Aides are split over how lofty of a target to set.
The aide also noted that CBO has reported that making the Bush tax cuts permanent would increase the deficit by $4 trillion in the next 10 years.
"They can tell you that they want to raise $300 billion dollars and drop the top rate to 28 percent without touching capital gains and dividends, they can say that's what they want to do, that doesn't mean they're telling you the truth, it doesn't mean they're giving you a plausible scenario," the aide said, "I want to have my cake and ice cream too, but you can't."
In reaction to this, a GOP aide tonight tells NBC that Republicans will wait for the CBO to weigh in on their offer.