Deficit 'super committee' may put off decisions

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http://www.latimes.com/news/nationworld/nation/la-na-super-committee-20111112,0,7559786.story

Deficit 'super committee' may put off decisions

Rather than risk stark failure, the congressional panel could decide now on only the outline of a deal, deferring the tougher calls until after the 2012 election.

Reporting from Washington—

With time and compromise slipping out of reach, the congressional "super committee" may punt its toughest deficit decisions to next year rather than strike a deal that would enrage both parties' political bases heading into the 2012 election.

The Joint Select Committee on Deficit Reduction has until Nov. 23 to agree to a package that would reduce deficits by $1.5 trillion over the next decade.

Achieving that goal would require painful compromise — both parties would have to give up political weapons they have hoped to wield over the next year. But failure could roil the financial markets as the holiday shopping season begins and further trash the already record-low approval ratings for Congress.

In an effort to avoid stark failure, a fallback plan is emerging that would push tough decisions on taxes to next year, perhaps into a lame-duck session after the election, according to officials familiar with the panel's discussions.

Under this scenario, the two sides would agree now to a level of revenue from new taxes. They would direct the congressional tax-writing committees to revamp the tax code with fixed dates and goals. The object would be to generate new revenue while lowering corporate rates and keeping the top individual bracket no higher than the current 35%.

The move would allow the two sides to reach the outlines of the deal now, while deferring the most difficult issues until both see who wins the 2012 election. Currently, election politics makes an agreement difficult — each side has used the budget stalemate as a rallying cry and each believes it stands a chance of winning next November and thereby being able to strike a better deal.

If voters deliver a clear verdict in November, Congress might be in a better position to come to terms.

"By kicking it into next year you're basically saying you're going to have this litigated in the next election," said R. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.

Even a limited deal, however, as it is being envisioned by those close to the secretive panel, would require substantial political give on the tax and spending issues that have come to define the modern political parties.

Democrats would have to allow sizable cuts to Medicare, Medicaid and other cherished domestic programs, and Republicans would need to loosen their signature anti-tax stance. Any discussion of an overall increase in revenues would probably violate the "no new taxes" pledge that most Republican members of Congress have signed, although a deal might be able to fuzz up the line enough that Republicans would not have to acknowledge having done so.

In proposals that have been exchanged so far, Democrats offered a package that would be made up of equal parts spending cuts and new tax revenues — but would push the tax component to next year.

Under that plan, a new set of "triggers" would be put in place that would be designed to automatically force tax-law changes if Congress failed to act.

No changes in Medicare or other entitlement programs would take effect until the tax changes were adopted.

The proposal was rejected by Republicans, who said the Democrats' insistence on $1 trillion in new revenue was a level they could not accept. They also said the proposed triggers would not be strong enough incentive to reach a deal. The GOP's own proposal offered $250 billion in new tax revenues, along with lower rates.

A deal presumably would have to fall between those two amounts.

The framework under discussion resembles one that President Obama and House Speaker John A. Boehner negotiated during the summer debt-ceiling debate as a way around the impasse over taxes and spending.

They, too, got stuck on the trigger mechanism — Democrats wanted to force automatic tax hikes and Republicans wanted the repeal of Obama's healthcare law. Boehner has said the failure to reach a big deficit deal with Obama is his biggest regret since becoming speaker.

Just as in the summer, getting to yes will require substantial give — particularly on the ratio of taxes to spending cuts — that could prove out of reach in the current political climate.

Some Republican leaders believe the White House would prefer to see the committee fail so that Obama could continue to run against a "do-nothing Congress."

"It does raise your suspicion," said Sen. Mitch McConnell of Kentucky, the Republican leader. "If the joint committee succeeds, it steps on the story line that they've been peddling, which is that you can't do anything with the Republicans in Congress."

Democrats have their own suspicions — that Republicans do not want any action that might seem to be an Obama success.

A compromise would assuredly result in an uproar on the political left and right, signs of which have already emerged. AARP is running ads warning lawmakers not to dare cut Medicare or Social Security. Top conservatives have made it clear that compromise on new taxes would be politically unforgivable.

Alienating so many important constituencies just as the 2012 campaign season is underway would be a tall order, even if the result could be followed by a grand political bargain.

But with time running short, many in Congress are loath to walk away from the possibility of a history-making achievement. Never before, experts say, has one group of lawmakers been given as much power as the super committee wields. Any proposal the committee members agree to has a guarantee of an up or down vote in both houses of Congress, bypassing the Senate's ability to filibuster.

"At this point it's in our hands on Capitol Hill," said Sen. Richard J. Durbin (D-Ill.). "We have this committee with extraordinary power and opportunity, and I hope they use it."

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http://www.nationaljournal.com/congress/what-if-super-committee-fails-members-suggest-congress-would-rethink-sequestration-20111113

What If Super Committee Fails? Members Suggest Congress Would Rethink Sequestration

By Billy House and Michael Catalini

Updated: November 13, 2011

The congressional deficit super committee has until Nov. 23 to come to an agreement on cuts.

House and Senate lawmakers would likely rethink allowing some budget cuts to be triggered automatically if the so-called deficit “super committee” fails to come up with at least $1.2 trillion in savings, or if Congress fails approve such a plan by Dec. 23, a member of the panel predicted on Sunday.

Appearing on Fox News Sunday, Sen. Pat Toomey, R-Pa., insisted he is not giving up on the chances that the Joint Select Committee on Deficit Reduction can make its Nov. 23 deadline for agreement on a plan to give to the rest of Congress to consider. That hopeful sentiment was echoed by the committee’s co-chairman, Rep. Jeb Hensarling, R-Texas., speaking Sunday on CNN's State of the Union—although his panel’s deadline is just 10 days away.

But Toomey said that if agreement is not reached on how to cut at least $1.2 trillion from the nation’s deficit over the next decade, “I think a lively debate will occur” over whether to allow the automatic cuts take place—so-called sequestration—despite President Obama’s insistence on Friday he would not go along with any attempt to turn them off.

Toomey said that “in the very very unfortunate event that we don’t, I think it’s very likely that Congress would reconsider the configuration of that sequestration, and consider is this really the best way to do it?” Toomey said.

He added that the debate likely would be about the “nature of those cuts—which I think the cuts have to occur, but they might occur in a different fashion.”

Toomey’s comments come amid growing speculation that Congress could change the breakdown of the $1.2 trillion in cuts that would automatically kick in if the panel and lawmakers fail to reach a deal—half of which would come from the Pentagon and the other half from domestic programs. Republicans, in particular, have complained that such automatic cuts would be particularly harmful to the military.

To counter such talk, the White House put out a statement Friday underscoring its position that sequestration was put in place to help force a deal to slash the debt, and should not be reconsidered.

Members of the committee acknowledge that as of this weekend, they were not close to bipartisan agreement—in disputes over levels of cuts to entitlements and defining and proposing new revenues, including tax increases. But they also insist that they are continuing to work to reach a deal.

Hensarling, during his appearance on State of the Union, reiterated that for the super committee to succeed, lawmakers will have to agree on structural reforms to entitlement programs and tax reform.

Hensarling zeroed in on entitlement spending arguing that Medicaid and Medicare are "disserving their beneficiaries with forms of rationing and driving the country bankrupt."

"Republicans put forth a plan in our House budget," he said, referring to the so-called Ryan Plan contained in House Budget Committee Chairman Rep. Paul Ryan's budget. Hensarling also said that Republicans would be "willing to negotiate around" the so-called Rivlin-Domenici budget plan put forth by former Democratic White House budget director Alice Rivlin and former Republican Senate Budget Committee chairman Pete Domenici.

"This is a plan, bi-partisan plan ... that would also include a provision for future seniors to stay in tradtiioanl fee-for-service Medicare but use the power of patient choice and competition to save and strenghthen the program," Hensarling said.

On revenues, Hensarling suggested that Republicans would be willing to support $250 million in tax increases—which he characterized as closing loopholes—in exchange for tax reform.

"Whatever damage would be done by $250 billion of new taxes we think would be offset by a system that would help create jobs," he said.

But during an appearance on Fox News Sunday, another panel member, Rep. James Clyburn, D-S.C., took a swipe at the so-called “dynamic scoring” that some Republican members of the deficit reduction committee reportedly are considering as a way to estimate how changes in tax policy might generate changes in the economy.

“We’ve got to come up with a plan that [the non-partisan Congressional Budget Office] will score,” said Clyburn, as opposed, he said, to “dynamic growth.” Clyburn said, “Let’s take this down to actual numbers, tax cuts, tax increases, entitlement cuts and entitlement increases.”

But Clyburn also acknowledged that even the six Democrats on the committee aren’t in agreement with each other.

“The fact of the matter is democrats have not coalesced around a plan,” admitted Clyburn. But he also said, “Republicans don’t have a [singular] plan.”

“I think we are there to develop a bipartisan plan,” he said.

"It's been a roller coaster ride. I will say this: I respect my Democrat colleagues. ... We haven't given up hope," said Hensarling during his CNN appearance.

Meanwhile, one member of the Senate's so-called bipartisan Gang of Six argued on Sunday that if the deficit super committee fails, then Congress should turn to proposals put forward over the summer by the group that call for nearly $4 trillion in cuts over 10 years.

"We've tried this congressional process. I think we need to let that play itself out. We want to be there to support it. We want that super committee to be successful, but if they're not successful we think that the Simpson-Bowles approach or the Gang of Six something that has got that $4 trillion number. That ought to at least get a vote as well," Sen. Mark Warner, D-Va., said State of the Union.

The Gang of Six, which includes Senate Minority Leader ####### Durbin, D-Ill., Senate Budget Committee Chairman Kent Conrad, D-N.D., and Sens. Warner, Mike Crapo, R-Idaho, Saxby Chambliss, R-Ga., and Tom Coburn, R-Okla., issued the outlines of a plan, based on the Simpson-Bowles report, that called for $3.7 trillion in deficit reduction over 10 years. The plan failed to reach the critical threshold of 60 votes in the Senate.

Coburn, also appearing on the program Sunday morning, said he sees failure in the order of what happened in Greece if Congress and the president cannot reach agreement on the deficit.

"Then fact is if you go back and look at two years ago at what they were writing about Greece. it's exactly what they're writing about us today," Coburn said.