Senate Minority Leader Mitch McConnell has some advice for President Obama as high-stakes debt and deficit talks intensify this week: Give Republicans all they want in spending cuts and don't raise taxes.
"I can say pretty confidently, as the speaker has, that we are not going to raise taxes in this agreement," McConnell told National Journal during a lengthy interview in his Capitol office. "And what the president ought to say to his own political left is, ‘Those crazy Republicans won’t let me raise taxes, but we need to do this for the country.’ That would be my advice to him. I’m not his political adviser."
Understatement. McConnell's vow, made to NJ before the midterm election, that his No. 1 goal was to defeat President Obama in 2012 still rankles the president's inner circle. McConnell said the sluggish recovery has made the argument against raising taxes more pressing—and GOP opposition more entrenched.
Vice President Joe Biden will meet with his bipartisan group of lawmakers three times this week, starting Tuesday, in the most concerted effort to date to forge a bipartisan compromise to raise the debt ceiling and cut federal spending. The specifics of a deal remain elusive, but the White House and congressional negotiators view this week as pivotal to developing genuine policy momentum.
McConnell told NJ for the first time what the deal needs to look like. He said that there's not enough time to consider comprehensive tax reform and that he wanted spending caps for eight years of any 10-year deal to resemble those created in the mid-1980s by the Gramm-Rudman-Hollings legislation.
"We would have to do something significant. A top-line for at least ’12 and ’13 on our annual discretionary spending that continues to send spending downward," McConnell said. "Caps beyond that; it’s better to have them than not. Out-year caps are worth having, even though we all know some people view those as a promise to something someday maybe. But the next two years would be clearly real and enforceable."
McConnell also called for entitlement reform but refused to endorse Rep. Paul Ryan's budget outline as essential to the Biden talks. McConnell and 41 other Republicans voted for the Wisconsin Republican's plan to end Medicare's fee-for-service benefit structure in 10 years and replace it with means-tested insurance subsidies.
"Out of this debt-limit discussion we need entitlement changes. I’m not going to get into what kind," he said. "But we need entitlement changes that bend the trajectory significantly downward. I’m not going to negotiate the details of that with you, but this whole package would have to be viewed by Moody’s and Standard and Poor’s and foreign countries and the American people." He said that the changes need to be dramatic enough to convince everyone that Washington is serious about the problem, "that adults are in charge in Washington and we’re going to get our house in order. We’re talking here about trillions, not billions."
McConnell did not call for structural budget reforms or a balanced budget amendment—items high on the priority list of tea-party-inspired conservatives. He also called only for hard, inflexible caps for the next two fiscal years—not all 10 in any potential deal. Congress evaded the Gramm-Rudman-Hollings (named after Sens. Phil Gramm of Texas and Warren Rudman of New Hampshire, both Republicans, and Ernest Hollings, a South Carolina Democrat) spending targets when they began to bite. And by side-stepping the Ryan plan, McConnell appeared to set his sights only on the most limited conservative fiscal priorities—tough, inflexible limits on spending in the next two years. The rest of the budget deal appears, by McConnell's standard, up for debate and fluid—a position that might enrage some GOP fiscal hard-liners.
All sides hope to resolve deep differences on taxation and spending in time to increase the current $14.3 trillion before the U.S. reaches a potential default threshold in early August. Treasury Secretary Timothy Geithner has projected the default deadline to be August 2, three days before Congress is due to recess for a five-week summer vacation.
McConnell said it will be easier to craft a large budget deal rather than a small one that would impose shallow cuts but only extend the debt limit for a handful of months—an idea that continues to circulate on the periphery of the Biden talks.
"I actually think it would be easier to pass a comprehensive plan," McConnell said. "The American people also want us to tackle the problem. And if we do it together, there will be no political price to be paid for it whatsoever. Let me give you a couple of examples. Ronald Reagan and [former House Speaker] Tip O’Neill fixed Social Security in 1983. It’s lasted for a generation. Reagan carried 49 of 50 states the next year. They did it together. Reagan and O’Neill did tax reform in 1986, Bill Clinton and Republicans did welfare reform in 1996, and Bill Clinton and Republicans actually balanced the budget for a number of years in the late 1990s.
"All of those efforts had significant political problems attached to them, but when you do it together, which one of the great opportunities presented by divided government, serendipitously nobody pays a price for it the next year because neither side can take advantage. So this is the perfect time for a grand, significant package on deficit and debt, and I hope that the president will not miss the opportunity."
This article appears in the June 14, 2011, edition of National Journal Daily PM Update.