Far-Reaching Reform On The Table At Debt Negotiations?
There's apparently a new proposal on the table at the debt negotiations, and it looks very interesting.
The Washington Post reports that President Obama is pushing for a deal on the budget that goes far beyond anything we’ve seen so far:
President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.
At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.
“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”
Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.
That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.
The administration argues that lawmakers would also get an important victory to sell to voters in 2012. “The fiscal good has to outweigh the pain,” said a Democratic official familiar with the discussions.
The New York Times reports that the proposal grows in part out of what have been, until now, secret discussions between the President and Speaker Boehner:
The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.
The intensifying negotiations between the president and the speaker have Congressional Democrats growing anxious, worried they will be asked to accept a deal that is too heavily tilted toward Republican efforts and produces too little new revenue relative to the magnitude of the cuts.
Congressional Democrats said they were caught off guard by the weekend White House visit of Mr. Boehner — a meeting the administration still refused to acknowledge on Wednesday — and Senate Democrats raised concerns at a private party luncheon on Wednesday.
Not surprisingly, the suggestion that entitlement reform is on the table now has Democrats worried:
Democrats are not just worried about the substantial policy issues at stake; they are also concerned about the political implications of any deal as they try to hold control of the Senate next year and win back the House.To the degree that any deal wins bipartisan support on slowing the growth of Medicare, for example, it would deprive Democrats of what has been one of their most potent arguments heading into 2012: their assertion that Republicans would gut the traditional Medicare system and leave older Americans vulnerable to rapidly rising health care costs.
Faced with the prospect that the federal government would default on its credit obligations, Democrats might indeed be cajoled into backing an agreement they did not strongly support. But at the moment, there is substantial private and public grumbling about what looms ahead.
Republicans, meanwhile, are still focused on the “no tax increases” pledge to a degree that one wonders if they would even accept the proposal that Post outlines:
Representative Eric Cantor, the Virginia Republican and majority leader, said Wednesday that he would not accept any net increase in federal revenues, and that any money raised from eliminating tax breaks or loopholes must be offset by cuts elsewhere in the tax code.
“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” Mr. Cantor said. “We have said all along that preferences in the code are not something that helps economic growth over all. But, listen, we are not for any proposal that increases taxes. Any type of discussion should be coupled with offsetting tax cuts somewhere else.”
It’s hard to know where this proposal will go until we know the details of whats in it and how the GOP reacts to it. In a rational universe, assuming that the Post description is what the proposal turns out to be, it seems like a no-brainer. In fact, much like December’s deal that extended the Bush tax cuts, it seems like a deal that’s more likely to bother Democrats than Republicans since it puts Medicare and Social Security on the table, and potentially depriving Democrats of a 2012 campaign issue that could work to their benefit in House and Senate races. For Republicans, while its not a perfect plan, it would surely seem to be pretty darn goo. The question for Republicans is whether they’ll let the perfect be the enemy of the good, and whether they’ll let themselves continue to be held hostage by the likes of Grover Norquist and Jim DeMint, who seem to forget that the GOP only controls one House of Congress. Democrats, meanwhile, have to give up the illusion that entitlement reform is out of the question, as well as the idea that we can continue pretending that there isn’t a long-term debt problem that can only dealt with by cutting spending.
This sounds like it could be the beginning of a real solution to the impasse, but only if everyone on both sides of the table agrees to act like an adult.