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Budget Deal: Go Big or Go Broke

With only twelve legislative days left until the July 22 budget deal deadline set by the White House, there are several major rumors/plans/proposals circulating throughout the Congressional stratosphere. Perhaps we'll begin to see some of these pitches come to fruition starting with the big White House meeting today, at which the expected attendees are:

House Speaker John Boehner
Senate Majority Leader Harry Reid
Senate Minority Leader Mitch McConnell
House Minority Leader Nancy Pelosi
House Majority Leader Eric Cantor
Senate Majority Whip Dick Durbin
Senator Minority Whip Jon Kyl
House Minority Whip Steny Hoyer

Whew, what a party this is going to be! And here are some of the proposals we may see come to the table:

  • Is President Obama a fiscal philanderer-turned-deficit hawk? Not likely, but I'd wager he's finally realizing that most voters understand that we cannot continue on this unsustainable path, that we need to grow the economy, and he wants to exemplify the role of the Great Bipartisan Healer. He and his team are supposed to suggest a plan somewhat bolder than their original, POLITICO reports:

With June’s unemployment figures due out Friday, success or failure will be measured most by the impact on jobs and the economy. But after being slow to the gate, the president’s handlers are clearly trying to portray him as the leader willing to put everything on the table to cope with the debt issue and get past the partisanship dividing Washington. ...

Rather than $2.4 trillion in deficit reduction—a dollar-for-dollar match for the debt ceiling increase due in August— the administration is aiming higher toward as much as $4 trillion over 10 years. Vice President Joseph Biden, in talks with Congress, has already done significant spadework but a $4 trillion target increases the likelihood of some commitment to tax reform in hopes of luring Republicans on board and lifting the economy to generate revenues for the future.

  • It appears that the GOP may be willing to accept larger defense cuts in exchange for not raising taxes:

Obama directed the Defense Department and other national-security agencies to slash $400 billion by 2023. But in the closed-door talks to raise the debt ceiling, larger Pentagon funding cuts have been seriously discussed, several sources said, putting the number between $600 billion and $700 billion over a decade.

A final decision has yet to be made, but the sources said negotiators have not ruled out making deeper cuts than Obama planned.

As the Aug. 2 deadline for defaulting on the debt approaches, GOP members have dug in and said any accord cannot include tax hikes.

Sources told The Hill recently that GOP negotiators are ready to break with recent Republican ideology by trading large defense cuts for not raising taxes as part of a debt-ceiling deal.

  • Senators Ron Wyden (D-Oregon) and Dan Coats (R-Indiana) have sent a letter to President Obama, proposing that the budget deal include a timeline for comprehensive tax reform in order to end the partisan stalemate:

Recognizing that there is not enough time to restructure the tax code by August 2, the senators call on the president and congressional leadership to include a timeline for a comprehensive tax reform plan.

“Therefore, we believe it is vital that any debt-reduction plan you negotiate contain a commitment to comprehensive tax reform, and ask you to include a timeline for completing it by the end of this year. It is not only the best move for the economy, it is the best opportunity we have to deliver tangible results for the American people.”

  • Between the corporate jet set-hating blather, Senator Durbin had a few interesting things to say to Bloomberg TV this morning (emphasis mine):

"I think we have basically the skeletal outline of an agreement of what we can reach, but it takes the political will... I’ll put Social Security on the table as long as several things are clear: Number one, any savings in Social Security goes to make Social Security stronger, longer... Secondly, we’ve got to make sure the benefits structure that people really count on, those in lower and middle-income categories, are going to be protected and enhanced."

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