Leaders May Push Debt Deal
As the super committee approaches its final week of negotiations, Congressional leaders who created the panel in the first place will have to decide whether to become more proactive in forcing the group to a deal.
To date, the top four Congressional lawmakers — Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.) — have expressed nothing but support for the Joint Committee on Deficit Reduction, in tones ranging from tempered optimism for a deal to urgent warnings of what could happen to the American economy and credit rating in the wake of failure.
Behind closed doors, however, the leaders have not been nearly as involved as they were in previous deficit reduction efforts. Sources close to leadership and the committee indicate that leaders are keeping close tabs on the super committee’s progress, are maintaining at least a staff-level presence in regular meetings, and are committed to seeing the panel succeed. But with nine days left for the super committee to find a deal, more leader involvement might be required, especially with the panel’s Democrats and Republicans seemingly still at odds over how to reconcile their differences on taxes and entitlements.
Super committee Republicans were the last side to make an offer in what has been an intense and secretive negotiating process. Their $1.2 trillion plan, devised by Sen. Pat Toomey (R-Pa.) last week, would be broken down into $700 billion in cuts and $500 billion in revenues, including $250 billion in tax code reform. GOP sources close to the committee said Co-Chairman Jeb Hensarling (R-Texas) was told late last week to expect a Democratic counter-offer from Co-Chairman Patty Murray (D-Wash.), but Democratic sources denied this. The most recent Democratic offer was made last Monday and was worth $2.3 trillion over 10 years, including $1 trillion in revenues and $400 billion in entitlement reform.
Though leaders and panel members have spent months touting the merits of a “big deal,” with time running out, it’s possible the super committee could take a potential escape route: A more modest plan that, at a minimum, would reduce the size of the automatic cuts that will take effect in 2013 if the panel fails to produce a package that reduces the deficit by at least $1.2 trillion. That trigger, known as sequestration, includes about $500 billion in defense cuts, already widely panned by Republicans, and Medicare cuts.
“That was foreseen as a possibility by the people who designed the committee in the first place, and it was a path that was laid out,” said a Senate GOP aide, when asked whether a smaller approach could be taken to soften the blow of the trigger.
The composition of such a deal likely would include the domestic discretionary cuts already found by the committee and then a hodgepodge of nontax mandatory savings that would bring revenue back to the government. Though sources close to the committee would not discuss the kinds of cuts being discussed currently, previous deficit reduction groups — such as the president’s debt commission — outlined where those savings could be found.
The Bowles-Simpson plan recommended finding savings through reforms in federal worker retirement plans; eliminating in-school subsidies for federal student loan programs; eliminating payments to states for abandoned mines; extending spectrum auction authority; indexing the prices of government products and services for inflation; requiring Tennessee Valley Authority, which provides electricity to 9 million Americans in the Southeast, to impose a transmission surcharge; and giving the Postal Service greater management autonomy.
Democratic aides, however, expressed a reluctance to take that approach. They worry it would produce worse policy than sequestration, because the trigger creates a firewall between defense and non-defense discretionary spending. Republicans refuse to discuss further defense cuts in the current super committee talks.
House Democratic and Republican leadership teams met Monday to review the super committee state of play, sources said, but there is still no clear path forward.
For now, at least, both Democratic and Republican leaders appear committed to the process and don’t want to risk walking away from the talks.
House Majority Leader Eric Cantor reiterated leadership’s support Monday.
The Virginia Republican repeatedly refused to answer specific questions on the work of the super committee during his weekly press conference. However, he did say his experience this summer working on a debt limit deal with Vice President Joseph Biden gave him sympathy for the negotiators.
“I know the kind of pressure they’re under,” said Cantor, who explained he has “been kept abreast” of the work by GOP members.
“I don’t think the sequester will be applicable because I believe they will get a deal by the deadline,” Cantor added.
But Republicans privately acknowledge they are becoming increasingly concerned the committee won’t be able to cut a deal in time. Those involved are “more and more pessimistic,” a House GOP aide familiar with the talks said. The aide added that “people are starting to talk about” who will shoulder the blame if the super committee fails.
Democratic sources are equally concerned about the blame game. Senate Democratic Conference Chairman Charles Schumer (N.Y.) last week said the panel was likely to fail, and he cited GOP resistance to tax increases as the reason why.
Aides said the panel’s GOP members are unlikely to disengage before the Wednesday deadline. From a political standpoint, “we’re in a staring contest where whoever is left at the table can claim to be most serious about this,” the Senate GOP aide explained.
“If necessary, we’ll be at the table by ourselves at the 11th hour,” a senior House GOP leadership aide said Monday.
Republicans argue they have built a public record of attempting to take the super committee seriously, and Schumer’s comments have shifted the onus onto Senate Majority Leader Harry Reid (Nev.) to demonstrate support.
“With Schumer out there talking it down … it really comes down to Reid,” a House Republican said.
Democrats — who also have shown no signs yet of walking away from the talks — dismissed the strategy.
“Serious legislators do not walk away from tough negotiations, and we hope Republicans have learned that painful lesson after the famous walk out by Leader Cantor and the double walkout by Speaker Boehner,” a House Democratic aide said Monday, referencing previous times this year when Republicans walked away from bipartisan attempts to solve the deficit problem.