Efforts for Plan to Avoid Fiscal Cliff Pick Up Speed

Posted October 21, 2012 at 12:00am

With the days counting down to the lame-duck session, efforts to devise a bipartisan plan to avoid the fiscal cliff are taking on new urgency in the Senate.

Senators from both parties are laboring to finish writing legislative language that could serve as the core of a proposal to replace the scheduled increase in taxes and automatic, across-the-board spending cuts due to occur at the start of 2013 with an alternative deficit-reduction package.

The plans share the idea of establishing a framework for deficit reduction that could win approval before the end of the year, requiring Congress to enact the actual spending cuts and revenue increases in 2013.

“People are realizing, one, that’s it’s going to be really tough to get past the fiscal cliff without doing something credible” in November or December, said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. “And two, it’s going to be really hard to write everything in the short period between the election and Christmas.”

The Bipartisan Policy Center joined the effort last week with the release of a proposed framework meant to provide lawmakers with the outlines of a grand bargain, including a road map toward legislative enactment. Some senators — such as Lamar Alexander, R-Tenn., and Michael Bennet, D-Colo., as well as the Senate’s bipartisan Gang of Eight — are working on more detailed policy proposals that could serve as a model for a bipartisan agreement in the lame-duck session.

“This is motivated by avoiding the fiscal cliff,” Steve Bell, senior director of economic policy at the Bipartisan Policy Center, said of the BPC plan. “It has the benefit, in our view, of laying out a very good parliamentary way to handle overall tax reform if they wish to put it in this. But it wasn’t motivated to make tax reform a reality. It was motivated to stop the fiscal cliff from occurring.”

In its three-page proposal, BPC asks Congress to pass a bill before the end of the year that would put in place measures to reduce the deficit by $4 trillion over 10 years, avoid a $600 billion hit to the economy next year that would come with the new tax increases and spending cuts under sequester. As BPC sees it, the bill would instruct committees with jurisdiction over tax and spending issues to come up with a specified amount of revenue increases and budget cuts in mandatory and entitlement programs next year.

As with budget reconciliation, the package would move under an expedited process — “accelerated regular order,” BPC said — bypassing procedural hurdles in the Senate.

Under the framework, Congress would make a down payment on deficit reduction in the initial bill that it is asked to pass before the end of this year. In case Congress does not adopt a package in 2013, the proposal provides for a “backstop” directing the president to achieve the required deficit reduction through a combination of cuts in mandatory spending and closing tax breaks.

Bell conceded that there may be questions about whether it would be constitutional to give the president the authority to close what are called tax expenditures as part of the enforcement mechanism. “The answer is, I don’t know,” he said. Bell said Congress “ideally” would specify in the legislation what authority the president would have.

Bennet and Alexander, meanwhile, are trying to put together legislative language for what is described as a similar but more detailed proposal.

The two senators and their staffs have provided few details about their proposal. But Bell, who has assisted them with the effort, said the goal is “an actual legislative package that would . . . actually change tax law and would actually change entitlement spending laws.”

A Senate Democratic aide who spoke on condition that he not be identified said the Bennet-Alexander proposal would “give leadership and the committees some options when everybody comes back to Washington” after the election.

Details to Change

Senate leaders said they are open to proposals offered by other senators as well as outside groups.

Last June, Senate Finance Chairman Max Baucus, D-Mont., told former Sen. Pete Domenici, who was testifying before the panel on behalf of the Bipartisan Policy Center, that he was looking forward to the framework the BPC was then still working on.

“We can help each other, frankly,” Baucus told the New Mexico Republican.

The House this year passed its own plans to avoid the scheduled tax increases and spending cuts. A reconciliation bill approved in May would replace most of the spending cuts in the first year of the sequester with reductions in mandatory spending on domestic programs. The House passed tax legislation in August that would extend the tax cuts until the end of 2013. The legislation also sets the parameters for an overhaul of the tax system to make it more simple and provides for expedited consideration of the measure.

Asked whether House Speaker John A. Boehner, R-Ohio, was open to the BPC plan, his spokesman Kevin Smith said Boehner supports the House “framework.” Unlike some other proposals, the House plan does not include a penalty for failure to overhaul the tax code. But it provides incentives to accomplish the task by allowing the tax cuts to expire if the overhaul does not happen.

Some speculate that Republican and Democratic lawmakers, despite their contrasting positions on taxes and entitlement programs, could build a bridge between the House legislation and emerging Senate proposals.

“I don’t think what the House Republicans have done is totally inconsistent with what a bipartisan agreement could look like,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. “Not in terms of the details. The details would have to change, but in terms of the idea that we [delay] the sequester temporarily and we pay for the savings and we extend some of the tax cuts and create a process for tax reform.”