Just like an old pilot, the Super Committee appears to be running out of options in its race to find $1.2 trillion in savings. With one week left before the November 23rd deadline, time is short and the sides are far apart. There has been a measurable increase in activity and it’s obvious the Committee members are trying to cobble together something, but can they bridge the gap?
The lack of time for the Committee to act would suggest no.
The deadline for them to favorably vote on a proposal is November 23rd, but the real deadline is much sooner. Why? The Budget Control Act requires that the report must have been scored by the CBO and that the score must be available to the Committee members “48 hours prior to the vote.” Scoring a complicated spending and tax package takes time, so any proposed plan would have to be sent to the CBO by early this weekend if there’s going to be any chance the CBO will get an estimate put together.
So time is really short.
The sides remain far apart, too. Last week, we saw two competing offers, one from Senator Pat Toomey (R-PA) and one from Senator John Kerry (D-MA). The Toomey proposal was a $1.45 trillion package of spending cuts and higher revenues, of which the revenue increases would be packaged as part of an overall reform of both the individual and corporate codes — lower rates, broader base, etc. Parsing through the whole of the tax items, $250 billion would likely be counted as a tax increase.
Meanwhile, the Kerry proposal included more than $2 trillion in deficit reductions, $1 trillion of which were in the form of tax hikes.
Today, several sources are reporting that both sides have moved little since then. Republicans appear willing to go up to $300 billion, while the Democrats are bringing their bottom line number down to $800 billion. Here’s CQ:
Pushed hard by John Kerry - who sees this budget deal as his legacy-maker - Democrats are now willing to drop their revenue number to $800 billion (from $1 trillion) in a final attempt to get to a deal. But in return, they’re going to insist that entitlement curbs over the next decade be held to that new, lower number as well. And the Republicans are showing every sign they’re going to spurn that offer. Not only do they want to extract more from Medicare and Medicaid, but much more importantly, they also are already so far outside their own comfort zone with their stated willingness to go for as much as $300 billion in new revenues.
So the two sides are still $500 billion apart on revenues in a package that is supposed to cut the deficit by $1.2 trillion. Worse, Republicans are having an internal debate over what constitutes a tax hike and, more specifically, what constitutes a good deal. Here’s Politico on that:
On one side of the revenue debate are conservative Republicans like Hensarling of Texas and Sen. Pat Toomey of Pennsylvania, two members of the deficit cutting supercommittee, who are privately telling their colleagues that they aren’t abandoning their principles by raising several hundreds of billions in fresh revenue by closing loopholes, as long as Congress is able to lower tax rates across the board.
On the other side are conservatives like Sen. Jim Inhofe of Oklahoma, Rep. Patrick McHenry of North Carolina and roughly 70 House Republicans, who are adamantly opposed to the bulk of the revenue raisers proposed, warning it’s bad policy and politics, and could become a black eye for their party.
Republicans don’t have much room to move. Democrats want more than the $250 billion in new revenues Toomey put on the table in an offer last week and to drop calls for permanently extending the Bush tax cuts, placing the GOP in between Democratic demands and a loud conservative base frustrated at their party’s negotiators to offer a tax concession.
With all that in mind, we’re sticking to our guns and remain skeptical that anything substantive comes out of the Super Committee process. They could cobble together some sort of Rube Goldberg contraption here in the last couple days, but it’s doubtful. They also might adopt a smaller package of spending cuts. Apparently members have a list of several hundred billion in cuts that fails to touch any third rail issues.
But the effect of that package would be to swap one set of cuts (those under sequestration) with another. It doesn’t move the ball down the field towards additional deficit reduction or comprehensive tax reform. And that’s really the point of all this, isn’t it?