As the House prepares to pass 'Cut, Cap, and Balance,' debt talks appear to be shifting to the Senate, where the newly-reconstituted 'Gang of Six' is reportedly closing in on a bipartisan deal. Sen. Tom Coburn (R-Okla.) -- who bolted from the cadre in May, and who outlined $9 Trillion in possible savings this week -- has now rejoined the group. He tells NRO's Robert Costa that a $3.7 Trillion debt reduction deal is taking shape:
A large group of Senate Republicans and Democrats, he says, are working to tie the group’s $3.7 trillion deficit-reduction plan to a debt-limit extension. “We ought to get the best possible deal and fight again,” Coburn says. “This is considerably more than what it was when I left [the group in May]. We ought to get more, but this is the reality of where we are.” After a meeting with over 50 senators this morning, Coburn is confident that there is a growing consensus to use the proposal as a debt-limit solution.
In an abbreviated appearance before the White House press corps this afternoon, President Obama commended the Senate, and the Gang of Six in particular, for its work. "We're in the eleventh hour," he said, so it's time to "talk turkey." The president reiterated his veto threat against Republicans' proposed 'Cut, Cap, and Balance' proposal, acknowledging that it will likely pass the GOP-controlled House before dying in the Democratic Senate. (This is almost certainly true. It's also worth noting the mounting opposition to a Balanced Budget Amendment in certain conservative quarters). Obama wrapped up by calling for an end to political posturing and gestures -- and somehow managed to eschew any mention of corporate jets.
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What's in the 'Gang's' new framework? It's hard to say, as specifics are very scarce. Here's the broad outline. Consider it with a giant pellet of salt, as much of its verbiage is extraordinarily vague:
- $500 Billion in immediate cuts; $3.7 in "cuts" from the CBO's March baseline. I placed "cuts" in quotation marks because the plan still increases spending overall, but slows the rate of growth. What would get slashed, and what wouldn't? We don't know.
- Funds the Medicare "doc fix" for ten years, while cutting Medicare and Medicaid spending by allocating money more "efficiently." Major weasel word alert. Again, no specifics. It appears the plan retains both health entitlement programs as they currently (broadly) exist, but "requires" Congress to tinker around the edges to identify cuts. Dream. On. (Also, Obamacare makes out almost entirely unscathed).
- Lowers marginal income and corporate tax rates, abolishes the Alternative Minimum Tax, and eliminates "spending within the tax code" (ie, loopholes and tax credits). The 'Gang's' one-pager claims this equation spits out a $1.5 Trillion net reduction of the overall tax burden. Color me skeptical.
- Imposes unspecified spending caps, and restricts unspecified "emergency" exceptions that may be used to circumvent future unspecified spending cuts. I won't specify what I mean, but are you detecting a theme here?
- Ensures Social Security's solvency by 75 years. How? Decennial reviews and a separate "reform track." Again, I ask: How?
For more solid reporting and analysis on this, see CATO Senior Fellow Dan Mitchell's 'Good, Bad, and Ugly' list HERE. Coburn says the plan isn't perfect and concedes it doesn't go far enough, but with a deadline looming, he's peddling the group's framework pretty aggressively:
“It’s not a tax hike, it’s a $1.5 trillion net tax reduction,” Coburn says when asked about conservative groups’ likely opposition to the deal. He cites the plan’s elimination of the Alternative Minimum Tax as an example of its conservative bona fides. “The American people want compromise, they want to solve the problem, and they want to see significant changes,” Coburn says. “It accomplishes all of those things. It doesn’t go far enough, but it takes a pretty big bite out of the apple. It’s going to take some time for them to consider this,” Coburn predicts. “But with a net tax cut in it, and you get some significant spending relief, what’s not to like? Live to fight another day.”
I like and admire Sen. Coburn, but I don't see how any conservative can endorse this amorphous outline until a lot more meat is applied to its bones. Which raises another question: August 2nd is fast approaching -- so how are they going to turn this framework into legislation, and get it scored, in time for a reasonable (or perhaps any) debate on its merits? Also, the fact that President Obama and Dick Durbin seem very positively disposed to this compromise presents another justification for skepticism. The president's blessing is not, ipso facto, a reason to oppose the deal, but based on this administration's woeful fiscal record, conservatives should exhibit due caution here.
UPDATE - The Republicans over at the Senate Budget Committee expose the sleight of hand that would allow the CBO to score this outline as a net tax reduction:
@BudgetGOP - CBO uses a baseline that assumes current tax rates expire. They treat an extension of those rates as a cut.
UPDATE II - More bold "leadership," Obama style. Leading from behind:
Pathetic.
UPDATE III - Appearing on Neil Cavuto's show moments ago, Sen. Coburn said he "hopes" the Gang of Six outline can be turned into legislative language and voted on prior to the August 2 deadline -- but that "some" people (it sounded as though he was talking about supporters) are "resisting" that timeline. That is worrisome.
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