Tad DeHaven

The “Grand Bargain” refers to a yet-to-be-realized agreement between Republicans and Democrats to put the federal government’s finances on a more stable trajectory in which both sides capitulate on long-standing policy positions. For Republicans, that means agreeing to more tax revenues. For Democrats, it means agreeing to reduction in entitlement program benefits.

(Ignore the new “grand bargain” proposed by the president on Tuesday, which called for meager corporate tax reform in exchange for blowing more taxpayer money on the administration’s favorite bad ideas. The offering was a DOA political stunt.)

The “Grand Bargain”—as originally understood—hasn’t happened and it’s not going to anytime soon. A group of eight Republican senators has reportedly been discussing a possible deal with the White House, but similar efforts in the past have gone nowhere and the political landscape remains unchanged: Republicans control the House; Democrats control the Senate and White House. With the 2014 elections looming on the horizon, the House isn’t going to raise taxes and the Senate will continue to be in no hurry to touch entitlements.

It’s already clear that Congress will once again not finish a budget for the upcoming fiscal year, which begins on October 1st. That means a continuing resolution to keep the government open. And shortly after, the government will no longer be able to stay below the statutory debt limit. Some conservatives have raised the idea of refusing to keep the government open/increase the debt limit unless Obamacare is repealed. That would be nice, but a lot of fellow Republicans have already thrown that idea under the bus. There’s pressure on the House leadership to go with that strategy, but it’s hard to imagine that Boehner & Co. will want to take a hostage that it isn’t prepared to shoot given that the president won’t sign legislation that defunds his signature boondoggle achievement.


Tad DeHaven

Tad DeHaven is a budget analyst at the Cato Institute. Previously he was a deputy director of the Indiana Office of Management and Budget. DeHaven also worked as a budget policy advisor to Senators Jeff Sessions (R-AL) and Tom Coburn (R-OK).



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