Liberals, Stop Freaking Out About a Grand Bargain

It’s not going to happen. Based on how little leverage each side has, any deal will mean merely minor changes.

WOODBOURNE, NY - SEPTEMBER 20: Children eat breakfast at the federally-funded Head Start Program school on September 20, 2012 in Woodbourne, New York. The school provides early education, nutrition and health services to 311 children from birth through age 5 from low-income families in Sullivan County, one of the poorest counties in the state of New York. The children receive 2/3 of their daily nutritional needs through meals, which include breakfast, lunch and snack, that are prepared at the school and served family-style in classrooms. The county Head Start program was expanded with a $1 million grant from President Obama's 2009 stimulus bill, the American Recovery and Reinvestment Act. Head Start, administered by the U.S. Department of Health and Human Services, is the longest-running early education program for children of low-income families in the United States. 
Getty Images
Add to Briefcase
Alex Seitz Wald
Oct. 24, 2013, 5 p.m.

Ru­mors of a “grand bar­gain” haunt Wash­ing­ton like a nettle­some pol­tergeist, and be­cause it could in­clude en­ti­tle­ment re­form, lib­er­als are feel­ing a touch of pre-Hal­loween fright. They worry that Demo­crats will squander the up­per hand they earned in the gov­ern­ment shut­down by mak­ing a bad deal with Re­pub­lic­ans (it wouldn’t be the first time) in the bicam­er­al com­mit­tee tasked with craft­ing a budget by Dec. 13 for the re­mainder of the fisc­al year. Out­side groups such as Demo­cracy for Amer­ica are warn­ing of “a civil war with­in the Demo­crat­ic Party” if any party mem­ber so much as thinks about touch­ing So­cial Se­cur­ity. The AFL-CIO de­clared “there will be no cov­er” for mem­bers who sup­port changes to en­ti­tle­ment pro­grams.

But pro­gress­ives can put away the pitch­forks, be­cause nobody seems in­ter­ested in mak­ing whatever bar­gain emerges from the com­mit­tee very grand. “Every­one, stop freak­ing out. This is go­ing to be a small thing. Folks are go­ing to try to find a top-line num­ber and that’s about it,” says a Sen­ate Demo­crat­ic aide fa­mil­i­ar with the ne­go­ti­ations. “This is not the su­per com­mit­tee, part two.” Tax rates — where Re­pub­lic­ans would need to com­prom­ise for Demo­crats to muck about with en­ti­tle­ments — are “not something that we’re talk­ing about,” says an­oth­er Demo­crat­ic aide close to the ne­go­ti­ations, so any­thing bey­ond a mod­est deal is un­likely.

That’s why, with the so­cial-safety net se­cure for now, Demo­crats hope to get two big things out of the budget con­fer­ence. First, they want to roll back se­quest­ra­tion cuts and boost spend­ing levels, es­pe­cially on in­fra­struc­ture, to cre­ate jobs; some Re­pub­lic­ans ap­pear amen­able. Second, they want to re­place those cuts with new rev­en­ue from clos­ing tax loop­holes; if the con­fer­ence breaks down, it’ll be over how to re­place se­quest­ra­tion.

Com­ing off a fight they mostly won, Demo­crats say they want a deal but feel con­fid­ent mak­ing some de­mands, for a change. “It will de­pend on wheth­er or not our Re­pub­lic­an col­leagues are will­ing to make com­prom­ises that they have re­fused to make so far,” Rep. Chris Van Hol­len of Mary­land, the rank­ing Demo­crat on the House Budget Com­mit­tee, tells Na­tion­al Journ­al. Spend­ing cuts have doubled since the 2011 Budget Con­trol Act, thanks to se­quest­ra­tion, and Demo­crats want to get back to those earli­er levels. “The BCA is what Con­gress de­term­ined on a bi­par­tis­an basis to be a fair level of spend­ing,” Van Hol­len says.

It says a lot about how far to the right Con­gress has moved on fisc­al is­sues that Demo­crats are now hop­ing to use their new polit­ic­al cap­it­al to re­store spend­ing levels set by a deal that House Speak­er John Boehner called “98 per­cent of what I wanted.” But Demo­crats have co-op­ted the aus­ter­ity ar­gu­ment and want to pre­serve the de­fi­cit re­duc­tion achieved by se­quest­ra­tion — just in a way less pain­ful than the in­dis­crim­in­ate, across-the-board cuts.

And they have some lever­age: Se­quest­ra­tion is just start­ing to af­fect the mil­it­ary, a sens­it­ive spot for Re­pub­lic­ans, while pro­grams that Demo­crats care most about have already borne the brunt of the bur­den. “I get an ex­tra bil­lion dol­lars this year com­pared to [last] year. De­fense? They lose $23 bil­lion,” Sen­ate Ma­jor­ity Lead­er Harry Re­id told, siz­ing up each sides’ pro­jec­ted losses.

Two of the Sen­ate’s biggest GOP de­fense hawks, South Car­o­lina’s Lind­sey Gra­ham and New Hamp­shire’s Kelly Ayotte, sit on the bicam­er­al com­mit­tee and have com­plained loudly about the cuts. “We need to add some money back, par­tic­u­larly for de­fense,” Ayotte said last week. What’s more, the House has had trouble passing ap­pro­pri­ations bills at se­quest­ra­tion levels. Con­ser­vat­ives sup­port the spend­ing re­duc­tions in the­ory, but they’ve balked at spe­cif­ic cuts, so Boehner wants to boost fund­ing levels as well.

The prob­lem is how to get there. Re­pub­lic­ans seek ad­di­tion­al cuts to do­mest­ic pro­grams to free up money for de­fense, but Demo­crats say they’re not go­ing to cut the likes of Head Start. In­stead, they want to use some of the nearly tril­lion dol­lars in “waste­ful spend­ing in the tax code” they iden­ti­fied in their Sen­ate budget, which in­cludes per­en­ni­al polit­ic­al foot­balls like the oil-pro­duc­tion tax cred­it and the car­ried-in­terest loop­hole. But Re­pub­lic­ans aren’t eager to be seen rais­ing taxes. “I’m pretty sure you know the House Re­pub­lic­an re­sponse to any­thing that is a net rev­en­ue in­crease,” says Wil­li­am Al­lis­on, a ma­jor­ity spokes­man for the House Budget Com­mit­tee.

And this is where talks could break down. It’s com­fort­able polit­ic­al turf for Demo­crats, who would in­ev­it­ably blame Re­pub­lic­ans for sid­ing with oil com­pan­ies and Grover Nor­quist in­stead of mak­ing a deal to keep the gov­ern­ment open. “It’s hard to take ser­i­ously claims that folks want to re­duce the de­fi­cit when they re­fuse to close a single tax loop­hole,” Van Hol­len says. But he in­sists that Demo­crats don’t want stale­mate. Com­pare their nar­row agenda to the lengthy wish list Re­pub­lic­ans presen­ted dur­ing the shut­down. They des­per­ately want a re­turn to reg­u­lar or­der, and a con­fer­ence com­mit­tee deal would be the first step. After all, Sen­ate Budget Com­mit­tee Chair­wo­man Patty Mur­ray is es­sen­tially out of a job if Con­gress con­tin­ues to fund the gov­ern­ment through con­tinu­ing res­ol­u­tions (there’s no need to write a budget).

The same could be said about House Budget Com­mit­tee Chair­man Paul Ry­an, R-Wis., al­though his am­bi­tions likely go bey­ond his chair­man­ship. In­deed, Re­pub­lic­ans sty­mied a re­turn to reg­u­lar or­der more than 21 times by re­fus­ing to make ap­point­ments to a bicam­er­al con­fer­ence com­mit­tee. But the gov­ern­ment shut­down changed that, and Demo­crats hope it’ll change the GOP’s stance on tax loop­holes as well. As one Demo­crat­ic staffer says, “It’s al­ways go­ing to be a non­starter for them, un­til the time they sign onto it.”


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.