Skip to content

What Would It Take for Action on Fiscal Cliff?

The subject of the fiscal cliff is a bit like the old “Perils of Pauline” movie serial. There will be numerous episodes where the country’s economy, like Pauline, hangs in the balance – until the next episode.

Financial markets remain largely indifferent to the possibility of disaster, assuming that, like Pauline, there will be some miraculous rescue because the alternative is unthinkable. Of course, given our thoroughly dysfunctional politics, people should start thinking.

On the other hand, there are lots of alternatives that could stave off catastrophe, with the options differing by election outcomes.

This will no doubt be one of several columns looking at what might happen, in this case based on what I believe is the most likely election outcome, with the giant caveat that many things can happen in the next five weeks to change each part of it.

Absent such a change, we would end up on Nov. 7 with something quite close to the status quo: a second Obama term; a continuing Republican majority in the House, albeit with smaller margins; and a continuing Democratic majority in the Senate, also with a smaller margin.

How Americans will react to an election marked by pessimism about the future, anger about Washington, D.C.’s inability to deal with the nation’s problems and a particularly high contempt for Congress – that results in no perceptible changes in the deck chairs on the ship of state – is both interesting and relevant. But it certainly will not point to a public willingness to tolerate continued gridlock and tribalism.

I believe that, for the most part, Democrats and Republicans in the Senate will hear that message. There is a pent-up desire among many Senate Republicans to return to a problem-solving mode, a desire that has been enhanced in recent weeks by the first significant effort in three years by the business community to step up to the plate and call for action to avoid fiscal turmoil.

The “gang of six” has two of the most responsible and thoughtful members of the Senate supporting it (without joining), Sens. Lamar Alexander (R-Tenn.) and Michael Bennet (D-Colo.). And a broader cross-section of Senators have been working on a plan not just to stave off sequesters and the potential recession caused by sudden spending cuts and tax increases but a bigger long-term plan to ameliorate the debt problem.

That plan is not likely to be a full-blown resolution of the problem, i.e., a 10-year detailed legislative program to cut $4 trillion from the debt via a mix of taxes and spending cuts from all areas, including entitlements.

The fact is that, contrary to most press reports and to conventional wisdom, no such detailed program exists.

We still do not have, from Simpson-Bowles, Domenici-Rivlin or the gang of six, a detailed plan in legislative language. After three years, all we have is a set of templates, leaving the tough specific decisions to Congress to resolve.

There are many reasons for this, not the least being that once specifics are put on the table, they will bring howls of outrage from many quarters. This, of course, is also why House Budget Chairman Paul Ryan’s budgets, long lauded by many in the commentariat for their commendable specificity, are not specific at all, and why GOP presidential nominee Mitt Romney’s budget and tax plans are filled with yawning gaps.

I expect a Senate plan that pushes the fiscal cliff off for six months or so, makes a down payment on bending the budget cost curve via some specific cutbacks in domestic and defense discretionary spending, directs tax committees to come up with a tax reform that also raises a third or so of the $4 trillion in revenues, and lays out some elements of change in Medicare and Medicaid to raise another third or more, all with directives to relevant committees to fill in the details during that six-month period. That is far from ideal, but mediocre would be considerably better than nothing.

The major kicker comes in the House. Any deal that includes a significant tax increase – which means any deal that is actually workable, as every bipartisan commission and gang has shown – will meet with stiff resistance from the anti-tax pledge crowd, which encompasses the vast majority of Republicans in the House.

The House, unlike the Senate, does not have a deep reservoir of problem solvers aching to come out of their shells. They exist, but nearly all are intimidated by the threat of a primary challenge financed by the Club for Growth.

The House in the 113th Congress will likely be even more polarized than the 112th. The real challenge will be for Speaker John Boehner (R-Ohio): Will he agree to a plan that can pass the House only with more Democrats supporting it than Republicans? Will Boehner, in other words, fall on a grenade when both Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy (R-Calif.) are poised to reach in and pull the pin?

Let me add another kicker to throw into the mix.

In 2014, Senate Majority Leader Mitch McConnell (R-Ky.) is up for re-election.

Remember that two years ago McConnell threw everything into trying to deny Rand Paul the Republican nomination for the Senate in his state – and despite his firm control of the party apparatus, failed miserably. The conservative base in Kentucky is very strong, and that will be a factor in how willing the top Senate GOP leader is to take on a fiscal plan that includes significant tax increases.

At the same time, Sen. Lindsey Graham (R-S.C.), an innate problem solver, is the number one target in 2014 of the Club for Growth, and Sen. Saxby Chambliss (R), one of the great heroes of the gang of six, is also up in Georgia, a state with its own conservative base.

Whatever happens in November, we remain far from a new politics of
problem-solving over an existing politics of tribalism.

Norman Ornstein is a resident scholar at the American Enterprise Institute.

Correction: Oct. 4, 2:30 p.m.

An earlier version of this article incorrectly identified Sen. Lamar Alexander (R-Tenn.) as a member of the “gang of eight” working on deficit reduction. Alexander is a supporter of the group but not a member. It also misidentified Sen. John Cornyn’s position in the Texas GOP Senate primary. Cornyn was officially neutral in the race.

Recent Stories

After loss in mayor’s race, Jackson Lee faces decision

High-speed routes biggest winners in latest rail funding round

Appeals court upholds most of Trump gag order in DC case

Kevin Up — Congressional Hits and Misses

House GOP cites new Hunter Biden charges in impeachment push

Congress must protect our servicemembers by reauthorizing Section 702