Cooler heads on Capitol Hill as 'super committee' toils to cut US deficit?
Bipartisan support for Congress's 'super committee' and its deficit-busting work has lately come to the fore. Moreover, some Republicans seem ready to redefine the 'no tax pledge.'
Washington these days is in a state of suspended animation: Everyone is watching and waiting to see if Congress's deficit "super committee" can defy huge odds and come up with a way – by Nov. 23 – to yank the federal balance sheet back from the abyss.Skip to next paragraph
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The panel has labored mostly behind closed doors, and the six Republicans and six Democrats serving on it have not divulged much – beyond lamenting how difficult the deficit-reduction task is and how slim their chances of success are.
But just when expectations could hardly get darker ... enter some glimmers of bipartisan hope.
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The first comes from 100 House members – 40 Republicans and 60 Democrats. On Nov. 2 they sent a letter urging the super committee to "put all options on the table" to cut deficits by $4 trillion over 10 years. That's akin to the scale of the "grand bargain" that President Obama and House Speaker John Boehner tried, but failed, to achieve over the summer during a showdown over the national debt ceiling – and it's much more than the $1.2 trillion in deficit reduction the panel is mandated to produce.
A second comes from the Senate, where the bipartisan "Gang of Six" senators working on deficit reduction has ballooned to 45. They, too, call for a $4 trillion deficit-reduction deal – one that includes reform of both entitlements and taxes.
Yet another glimmer comes from within Republican ranks. A behind-the-scenes discussion is under way, on and off Capitol Hill, that could clear the way for some GOP lawmakers to agree to close tax loopholes – a move that would raise government revenues – on grounds that cutting these "tax expenditures" will actually reduce the sway of big government and spur economic growth. It's a delicate issue for elected Republicans, almost all of whom have pledged not to raise taxes – and not to end tax breaks, unless the resulting revenue increase is offset dollar for dollar by new tax cuts.
Much is at stake as the Joint Select Committee on Deficit Reduction, as the panel is officially known, knuckles down ahead of its pre-Thanksgiving deadline. The panel could opt to undo decades of work by K Street lobbyists who carved out tax and other advantages for their causes and corporations. It could raise the standing of Congress by presenting a viable plan that distributes the pain, or it could further sink the institution's public esteem by dissolving in acrimony and stalemate. It could put the federal government on the path to fiscal responsibility, or it could punt – and risk a rebuke from the markets and the rating agencies that determine America's creditworthiness.
"The super committee represents our best, and possibly only, chance to make the real reforms needed to return our country to fiscal health," said Rep. Mike Simpson (R) of Idaho in a statement, as the Nov. 2 bipartisan letter made its way to the panel.
No one, however, should be sanguine about the panel's prospects. Powerful forces drive lawmakers to hold to partisan lines. For Republicans, it's a commitment to no net increase in taxes. For Democrats, it's no significant cuts to entitlement spending, such as Medicare, Medicaid, or Social Security, unless Republicans agree to tax hikes.
That impasse puts taxes at the center of any bid to reach a deal. Nearly every Republican in Congress – and all six GOP members of the deficit panel – have signed the "taxpayer protection pledge" maintained by Americans for Tax Reform (ATR) and its president, Grover Norquist.
Given the gravity of America's economic crisis, some economists in good standing with conservatives are challenging whether the limits imposed by the ATR pledge still make sense. Three think tanks are also engaged in the discussion but will not go on the record. At issue is whether some tax breaks distort markets and harm growth. Big tax breaks can be just as much a symptom of big government as big spending, they say. If so, the argument runs, why should lawmakers who oppose excessive government spending be bound by a pledge to protect harmful or excessive tax expenditures, especially if axing them enables Congress to reduce the deficit, lower overall tax rates for individuals and corporations, and promote growth?