'Gang of Six' Banding Together, Gaining Momentum in Debt Talks

The Gang of Six senators have decided to band together once more, saying Tuesday that the bipartisan group has reached an agreement to trim more than $4 trillion off the deficit over the coming decade.

The group of more than 40 Republicans and Democrats -- rejoined by Oklahoma Sen. Tom Coburn, who returned after winning concessions on more cuts to costly federal health care programs -- came up with a plan President Barack Obama called broadly consistent with the White House's approach to raising the debt limit. He described it as a very significant step.

We're in the same playing field, Obama said Tuesday from the White House.

After failing to reach an accord -- and apparently disbanding last week -- the group says it's nearing an agreement on a proposal, which could offer an alternate strategy for pushing an increase in the debt limit through Congress before the Aug. 2 deadline.

We've gone from a Gang of Six to a mob of 50, said Sen. Joe Manchin, D-W.Va., as he emerged from the meeting. The proposal, he said, shows great promise.

I will support it. It is a fair compromise, added Sen. Kay Bailey Hutchison, R-Tex. This is a way forward where we can do the work that we have come here to do.

According to a copy of a summary of the Gang of Six plan, it would impose $500 billion in deficit cuts, cut security and non-security spending over 10 years with spending caps, make the Medicare and Medicaid healthcare programs operate more efficiently and abolish the Alternative Minimum Tax.

The tax reform outline would set up three income tax rates: a bottom rate of 8-12 percent; a middle rate of 14-22 percent and a top rate of 23-29 percent to replace the current system that has a bottom rate of 10 percent, with five additional rates topping out at 35 percent, The Associated Press reported. It would also reduce, but not eliminate, tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement saving and tax credits for families and children.

The development arrives as lawmakers and the Obama administration continue to spar over the creation of a debt-reduction that a hostile Congress would agree to, allowing the rise of the legal limit on government borrowing. If Congress consents to a plan to raise the $14.3 trillion debt limit by Aug. 2, Treasure officials have warned the government will begin to default on its obligations.