It looks like there will be no ‘Grand Bargain’:
A new congressional committee, working against a deadline for a budget agreement, most likely will turn to limited spending cuts and revenue increases while doing little to slow long-term growth of the nation’s debt.
Both sides are lowering expectations for a breakthrough on trimming the nation’s $17 trillion of debt, focusing instead on replacing the automatic spending cuts approved in 2011, known as sequestration, that are trimming funding for education, transportation and medical research.
This is good news, but we’re not out of the woods yet:
The measures most likely to survive negotiations are a proposal from President Barack Obama’s 2014 budget to slow the pace of Social Security’s cost-of-living increases paired with curbing of some tax credits and exemptions that don’t raise income tax rates, said Steve Bell, a onetime senior Republican Senate budget adviser. Republicans and Democrats say it’s the best they can do after bitter partisan battles.
Yeah, Social Security is already going down relative to income and most people have less money for retirement, but we need to cut it more. In some sense this is funny since a Republican is saying that some tax credits and exemptions might be eliminated, let’s ask actual Republican lawmakers about that:
Other leaders on both sides are digging in, raising the specter of another stalemate. Talk of revenue has no place in the new budget conference, Ryan said.
“If they see the conference as an excuse to raise taxes, I don’t think it’s going to be successful,” said Ryan, who declined to identify any exemptions or credits his party could support ending. “I hope that’s just posturing.”
Republicans say they already agreed to about $600 billion in fresh revenue in the next decade, citing a law passed in January that let the top income tax rate rise to 39.6 percent from 35 percent. “My guys are not willing to swallow hard on revenues,” said Senator Saxby Chambliss, a Georgia Republican and veteran of past debt-reduction efforts. Both Ryan and Chambliss said the revenue issue belongs in a broader discussion on tax reform.
This is actually a good thing, since here is what would otherwise be on the table:
Many Republicans want to replace the automatic cuts with reductions in spending on these entitlement programs that account for most of the nation’s long-term debt. Democrats, Obama among them, have indicated they’re open to some of these ideas as long as they are paired with new tax revenue, which Republicans oppose.