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Need to Know: Budget

No Turning Back?

The deficit commission transformed the debate. But Washington may still lack the will to change.

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Alan Simpson (C), co-chair of the National Commission on Fiscal Responsibility and Reform, and co-chair Erskine Bowles (L) listen as Sen. Tom Coburn (R-OK) speaks during the commission's December meeting on Capitol Hill December 1, 2010 in Washington, DC. Bowles and Simpson unveiled the commission's deficit reduction proposal during the meeting.(Getty Images)

Outside the hearing room, the usual battles were raging. Over in the House, Speaker Nancy Pelosi maneuvered ruthlessly through her final days in power, holding an abrupt vote to extend middle-class tax cuts while letting taxes for the rich rise. (“Chicanery!” declared GOP Minority Whip Eric Cantor.) In the Senate, Minority Leader Mitch McConnell vowed to filibuster everything that didn’t have to do with tax cuts. (“Obstruct and delay!” the Democrats shouted.)

But elsewhere on Capitol Hill, inside the Hart Senate Office Building, a kind of Camelot moment was occurring. A group of prominent Democratic and Republican legislative leaders were behaving like actual “adults,” as they kept noting with self-approbation. Suddenly, everything seemed possible: Democrats were talking about cuts in Social Security and Medicare, and small-government Republicans were considering new ways to raise tax revenue—a discussion that in Washington these days is about as close as one gets to Arthurian chivalry.

 

“I’ve been here for 29 years. We’ve never had this conversation,” remarked Sen. Dick Durbin of Illinois, No. 2 in the Democratic leadership, as the presidential deficit-and-debt commission presented a bold plan on Wednesday. Even the commission’s chairmen were surprised by the debate they stirred. “There’s no turning back now. The era of debt denial and its consequences are over,” boasted Erskine Bowles, the normally restrained former White House chief of staff for President Clinton who led the commission along with crusty Republican Alan Simpson. “Together, I think we have started an adult conversation.”

That is true—sort of. The commission’s proposals did manage to move the national “debate” away from the fantasy nostrums of the recent election campaign—the idea that eliminating earmarks or cutting waste, fraud, and abuse could take care of the deficit—to a reluctant reckoning with reality. Which is that cutting the deficit and debt will require both revenue increases and serious curtailment in the biggest entitlement programs, particularly Medicare. In the end, even three conservative Republican senators on the commission who originally voted against its creation—Judd Gregg of New Hampshire, Tom Coburn of Oklahoma, and Mike Crapo of Idaho—all said they supported the final product.

 

But all that bonhomie is a long way from saying that this divided government might be ready to take on the hardest problems—fixing the economy and restraining runaway spending and entitlements. The real question is whether the “adult conversation” will ever translate into actual votes or even make it onto the legislative agenda. No matter how much people agree that it’s time for a national adulthood, the critical mass for transformative change—something that would require broad consensus in both parties—is almost certainly not there.

“I think it’s a long shot,” says G. William Hoagland, who was a top aide to then-Senate Majority Leader Bill Frist. Hoagland is one of several who say that a much larger crisis will probably be required, that the fear factor isn’t yet great enough to offset the combined “screams and hollers” of the vested interests in Medicare, Social Security, and tax exemptions—those lobbyists whom Simpson called practitioners of the “dark arts.”

And, predictably, the yelps began almost immediately: On the right, Grover Norquist, founder of Americans for Tax Reform, called the plan “snake oil” and dismissed it as “no more than an excuse to raise taxes.” Economist Antony Davies of George Mason University described the spending cuts as mere “window dressing.” Meanwhile, Tamara Draut of Demos, a liberal think tank, called the commission members “out of touch” and contended that their plan “ignores the need for immediate public investments to spur job creation, relies too heavily on discretionary spending cuts, and slashes Social Security at a time when fewer Americans can count on a secure retirement.”

Skeptics say that only another market meltdown, triggered this time by a collapse of confidence in the dollar, would be powerful enough to overcome years of political inertia. “Once we hit the [$14.3 trillion] debt limit next spring, if we’re in a standoff situation here and the international markets are nervous about default, that’s the kind of defining event that might force action,” Hoagland says. Bob Bixby of the Concord Coalition agrees. “It would take something bigger, like a major plunge in the dollar or the stock market, or a decision by China not to buy U.S. bonds—something that was tangibly connected to the debt. We haven’t had that yet,” Bixby says.

 

It’s already clear that even though Republican leaders want to shrink the deficit, they don’t want to give President Obama a major victory in the next two years. Presumptive Speaker John Boehner has not replicated outgoing Speaker Pelosi’s commitment to hold a House vote on the deficit-commission proposal, even if it got the requisite 14 votes from its own members. Obama has all but conceded—unilaterally, it seems—that he’ll extend the Bush tax cuts for a certain period. “A lot of Republicans, including the leaders, will say, ‘This is great. We can let this [deficit cutting] go and still put all of our eggs in one important basket, which is defeating Barack Obama, and then we can deal with the issue under a Republican president,” says Norman Ornstein of the American Enterprise Institute. “Why make some of these tough decisions now, when we’re going to have even more advantage?”

This article appears in the December 4, 2010 edition of National Journal Magazine.

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