Big Spending Two-step: Beltway Deficit Talks Underway
At least a dozen Republican senators are regularly meeting with President Obama’s top aides in an attempt to plot a way forward on the looming fiscal challenges facing leaders this fall, senators involved in the meetings tell National Journal.
The meetings, which began after Obama hosted GOP senators for dinner earlier this year, are the first sign that Democrats and Republicans are in talks to strike a deal that would reduce the deficit and reform entitlements and taxes.
“Everybody’s trying to assess whether we can accomplish something that would be big,” said Republican Sen. Richard Burr of North Carolina, who has attended the meetings. “Big is reforming entitlements and it’s impossible to see a path where you get additional revenue without tax reform being part of it.”
First it was the 2011 talks of a big deal. Then it was any number of Big Fiscal Deal (BFD) talks in 2012, then the aforementioned dinner with President Obama. None of this accomplished anything remotely resembling a major deal for spending reductions, entitlement reform (read: cuts), or tax reform. None of these conversations ended well, though the 2012 discussions did bring about the disastrous fiscal cliff deal made in January.
The closest any discussions came to actually accomplishing anything of substance was the Budget Control Act of 2011. Despite the effusive praise and criticism in the Beltway and overspending crowds, respectively, the Act didn’t even “cut” 5% of the next decade’s spending.
As is typical with BFDs, conservative senators like Rand Paul, Tom Coburn, Mike Lee, and Ted Cruz haven’t been invited. The list of attendees does include fiscally grandstanding Senators, though, including amnesty-supporting Senators Corker, Hoeven, McCain, Ayotte, and Graham.
Senator Burr of North Carolina says talks are going just fine, even if they include tax increases:
An administration official said White House aides have made clear to Republicans that the president’s offer from December—including $600 billion in new tax revenue for $400 billion in Medicare and other health care cuts—still stands.
Republicans are open to $600 billion in revenue, Burr said, but want to see it come from a mix of entitlement and tax reform. And the GOP opposes Obama’s $400 billion in Medicare cuts, arguing they want more structural reforms.
And while they have a way to go, Burr said both sides recognize that it gets tougher to cut a grand bargain as time passes.
To put this in context, the federal budget in 2013 was $3.8 trillion. A $600 billion tax increase over 10 years is less than one-sixth of that budget. Even worse, the Congressional Budget Office projects almost $47 trillion in spending over the next decade in its optimistic projections, and over $48 trillion in its more realistic (though still uncertain, as projections tend to be) assessments. Tax increases of $60 billion every year for the next ten years would be very harmful to the still-struggling economy, yet only raise 1.25% of the next decade’s spending.
In the end, this effort is almost certain to fall apart. A BFD that includes tax increases is anathema to those who have taken Economics 101, and real spending cuts are opposed by most in Washington. fa. Tax increases would likely target those who already pay the vast majority of taxes, which is both economically inefficient and unfair. Meanwhile, spending cuts of less than $500 billion annually aren’t even worth considering by fiscal conservatives, since anything less leaves a substantial federal deficit. Furthermore, small “cuts” could easily be reversed, as no future Congress is bound by the actions of a current Congress.
In other words, the bipartisan effort to overturn sequestration is likely to be seen in any future deficit and debt talks, which is why initial cuts must be large enough that capitulation by future Congresses will still leave meaningful cuts in place.
Congress needs to stop looking at debt and deficits from a political perspective. It is a math problem and a moral issue for all Americans, especially young people. The longer these realities are ignored, the worse the problem is going to get.