Congress has failed in every attempt to forge significant compromise to course-correct the nation away from the fiscal cliff it’s headed toward, and the makeup of the deficit reduction committee so far does little to abate those fears. With nine of the 12 lawmakers now named, the chance for deadlock—which would trigger painful and unpopular across-the-board spending cuts—seems greater than the chance for compromise.
“It’s not exactly the ‘grand bargain’ dream team when I look at it,” said Bob Bixby, executive director of the Concord Coalition, which advocates for fiscal responsibility.
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None of the six senators tapped for the deficit reduction panel were part of the “Gang of Six” that has already done a lot of the leg work toward achieving the committee’s goals. One of the appointees, Senate Minority Whip Jon Kyl, R-Ariz., walked out of the debt ceiling talks with Vice President Joe Biden, and three of those named—Senate Finance Chairman Max Baucus, D-Mont., House Republican Conference Chairman Jeb Hensarling, R-Texas, and House Ways and Means Chairman Dave Camp, R-Mich.—served on the Simpson-Bowles commission, and all voted against the commission’s recommendations for deficit reduction through spending cuts and revenue increases. Further, Sen. Patty Murray, D-Wash., will serve as co-chairwoman of the super committee while simultaneously running the Senate Democrats’ campaign operation for 2012.
“[Murray’s] position, I think, is incompatible with serving as co-chair of a committee like this,” Bixby said. “On a committee like this if they’re going to get anything done, both sides are going to have to make some concessions. On the campaign trail you try to emphasize differences. It’s kind of difficult to bring about consensus on the one hand and sharpen differences on the other.”
The chances of deadlock are rooted in the intractable partisan divide over taxes. Democrats want to raise them; in particular they want to roll back the Bush tax cuts for the wealthiest Americans and use the revenue toward deficit reduction. Republicans are united against any tinkering with the tax code that is not revenue neutral and oppose any effort to raise revenues to pay down the debt. Republicans also want to target entitlement spending on programs including Social Security, Medicare, and Medicaid, but Democrats have ruled out any changes to entitlements unless taxes are on the table.
House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., made it clear from the beginning that no Republican on the panel would vote in favor of tax increases of any kind, and their nominees reinforce that: Kyl, Sen. Pat Toomey of Pennsylvania, Sen. Rob Portman of Ohio, and Camp, Hensarling and Rep. Fred Upton of Michigan. A former president of the anti-tax Club for Growth, Toomey, in particular, is a signal of the GOP’s unwillingness to bend on taxes.
Senate Majority Leader Harry Reid’s selection of Murray, Baucus, and Sen. John Kerry, D-Mass., similarly underscores that Democrats are not going to sign off on any drastic entitlement changes ahead of an election cycle where Democratic control of the Senate is in question. House Minority Leader Nancy Pelosi, D-Calif, has not made her appointments yet. However, Democrats have been more willing to negotiate on entitlements, while Republicans have made no similar concessions on taxes. For example, President Obama floated a proposal to raise the Medicare beneficiary age in his unsuccessful attempt to strike a $4 trillion “grand bargain” with Boehner on deficit reduction.
“I think the odds now are less than 50-50 for the kind of broad-based deal that we want here at the BPC,” said Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center, which has done extensive work on deficit reduction.
Bell contends that there is some cause for optimism, for two reasons. The first is that lawmakers on the panel bring policy bona fides and internal gravitas with their respective rank-and-file. “This is a group so far that really, really knows its stuff,” he said.
The second—and more motivating factor—is fear. “These are human beings and I think they’re only going to react to fear that the marketplace exhibits if they fail to act,” Bell added. In particular, fears remain following the recent downgrade by Standard & Poor’s that other agencies including Moody’s and Fitch will follow suit with additional downgrades if the deficit reduction panel makes no major strides toward that end.
As structured, the committee must find $1.5 trillion in deficit reduction over 10 years by Nov. 23 and approve it with a majority vote in order to fast track it through Congress by Christmas. If the panel deadlocks along partisan lines, it would instead trigger across-the-board spending cuts in the orbit of $1.2 trillion with half of those cuts coming from defense, and the rest from discretionary spending. Entitlements would remain largely untouched if the cuts are triggered by inaction.
A third option is that the panel could agree to spending cuts below their $1.5 trillion target, which if approved, would lower the trigger amount for spending cuts. For instance, if they approve $800 billion in spending cuts, it would still trigger sequestration, but lower the total from $1.2 trillion to $400 billion. However, lawmakers on the committee insisted on Wednesday that their goal was to fulfill their obligation. Toomey told reporters that a comprehensive plan was "much, much preferred over the default settings."
Lawmakers return in September with just 77 days until the Nov. 23 deadline.
Dan Friedman, Katy O'Donnell contributed. contributed to this article.
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