The cast for this fall’s budget brawl is set, but it is anyone’s guess whether the group will play long ball, small ball or put off the toughest decisions until after the 2012 elections.
Congressional leaders picked 12 Members for the Joint Committee on Deficit Reduction last week amid turbulence on Wall Street that followed Standard & Poor’s historic downgrade of U.S. debt. It was a downgrade S&P blamed in part on partisan bickering over raising the debt ceiling.
“I can’t imagine circumstances that would put more pressure on us to get something done,” Sen. Pat Toomey (R-Pa.) said last week on Fox News after he was named to the committee. “When you consider what’s happened in just the last few weeks, you know, it really all points to the urgency of doing something meaningful.”
Initial statements from leaders and committee members began in a conciliatory fashion, with a charge to agree on a deficit reduction package of at least $1.2 trillion.
But the roster, composed primarily of staunch partisans close to leadership, doesn’t inspire hope for a big compromise.
Sen. Patty Murray (Wash.) will be juggling her duties as Senate Democrats’ campaign chief and co-chairwoman of the committee. And the other co-chairman, House Republican Conference Chairman Jeb Hensarling (Texas), might be the most conservative member of the GOP leadership team.
And no Members of the bipartisan “gang of six” lawmakers in the Senate made the cut.
The committee doesn’t lack for experience — four of the 12 picks served on last year’s fiscal commission led by former Sen. Alan Simpson (R-Wyo.) and President Bill Clinton’s White House chief of staff, Erskine Bowles. But all four — Hensarling, Senate Finance Chairman Max Baucus (D-Mont.), House Ways and Means Chairman Dave Camp (R-Mich.) and House Democratic Caucus Vice Chairman Xavier Becerra (Calif.) — voted against the compromise Simpson and Bowles authored.
Still, some of the picks have worked across the aisle — notably Baucus and freshman Sen. Rob Portman (R-Ohio), the former budget director for President George W. Bush who has respect on both sides of the aisle for his budget acumen and interest in crafting a deal.
But the larger dilemma remains, regardless of who was picked. How can you fashion a compromise between Republicans, who have vowed not to raise taxes, and Democrats, who are demanding an end to tax breaks for the wealthy and corporations before they will consider cutting Medicare, Medicaid and Social Security?
A senior Democratic aide said revenues are the main question for the committee. “That will determine whether there’s a deal or not. With that level of scrutiny, and in the wake of S&P calling out Republicans’ intransigence on revenues as a main reason for their downgrade, it will be a challenge for them to keep making the argument that there are no loopholes or giveaways to billionaires or oil companies they would find it acceptable to close,” the aide said.
Another Democratic aide said the GOP presidential debate last week — where every candidate said they would reject a deal with a 10-to-1 ratio of cuts to tax increases — wasn’t a good sign.
“If the super committee is going to have any chance to succeed, the Portmans … and the Camps will have to resist this new normal in the GOP,” the aide said.
House Republicans have generally said they’d be open to closing loopholes and shrinking deductions — if the proceeds go to lowering tax rates rather than deficit reduction.
Toomey, however, has noted he’s willing to eliminate tax subsidies, like the one for ethanol, to cut the deficit. Toomey has argued that some of the so-called tax expenditures are “indefensible” and have no functional difference from a spending program. But he also said he’s interested in lowering rates to foster economic growth and isn’t interested in a “big tax increase.”
House Majority Leader Eric Cantor (R-Va.), meanwhile, struck an uncompromising tone in his own memo to Republicans on the panel last week, saying the GOP should “demand” no tax increases as part of any deal despite the pressure in the wake of the S&P downgrade.
The committee has some things going for it that previous commissions and negotiating groups didn’t — a guarantee of an up-or-down vote in both chambers on its recommendations without amendment and a $1.2 trillion “trigger” that will slice defense, Medicare and other spending starting Jan. 1, 2013, if it fails.
The generally miserable poll ratings for Congress in the wake of the debt negotiations might push the parties together, and this committee, unlike the Simpson-Bowles panel, only needs a simple majority to send a bill to the floor.
And there are other incentives for Democrats and President Barack Obama to hope for a deal — rather than simply take the issue to voters.
Democrats have been pushing to expand and extend the 2-percentage-point payroll tax cut through the elections and include infrastructure spending to help provide jobs and juice the economy as Obama seeks re-election. Such items might be hard to get through Congress unless they are part of a debt reduction deal.
The panel will also have to decide soon whether it can reach a framework for a bold deal that would combine tax and entitlement reform — the elusive “grand bargain” — or whether to shoot for a less ambitious plan that cuts programs such as federal retiree benefits and agriculture subsidies and punts on the larger issues.
Senators and aides have said that including broad tax reform would be difficult because of the committee’s short time frame. After Congress returns and the committee meets for the first time, by Sept. 16, it will have just more than two months to meet the Nov. 23 deadline for a deal.
Toomey told reporters that the panel shouldn’t dismiss tax reform because of the time constraints but should look at proposals various groups have already vetted.
Correction: Aug. 15, 2011
An earlier version of this article misstated when a “trigger” to automatically cut defense, Medicare and other spending would kick in if Congress fails to enact at least $1.2 trillion in deficit reduction by Dec. 23. The automatic cuts would begin Jan. 1, 2013.