Plan B for the supercommittee?

at 02:13 PM ET, 11/11/2011

Could there be a contingency plan for the supercommittee? Two weeks away from the deficit-reduction group’s deadline, members have hit an impasse over revenue that’s fueled the growing predictions of failure. In response, some policy advocates are urging the supercommittee to save itself by pulling a more moderate compromise off the shelf. Third Way — the centrist Democratic think tank — is lobbying the supercommittee to adopt a $1.2 trillion deficit-reduction plan that it titles, “In case of emergency, Break Glass.” The plan doesn’t contain the sweeping changes of the kind of “grand bargain” that both Republicans and Democrats are gunning for, but it does fulfill the supercommittee’s basic mandate by culling ideas from President Obama, Bowles-Simpson, and GOP Sen. Tom Coburn.


Rep. Jeb Hensarling and Sen. Patty Murray, supercommittee co-chairmen. (AP )
“A grand bargain is ideal but a distraction. ... With that falling apart, the whole supercommittee could fall apart,” says Jim Kessler, Third Way’s vice president for policy. The group’s “break-glass” plan contains $426 billion in new revenue — compared with the $1 trillion that Democrats are currently demanding — without raising marginal tax rates, in hopes of appeasing Republicans. It also contains $556 billion in cuts to mandatory spending, but with relatively minimal reductions to entitlement benefits, in hopes of satisfying Democrats. It also has about $420 billion in defense cuts — a substantial figure, but less than the $600 billion in cuts that would be triggered if the supercommittee fails. Finally, it leaves some of the most contentious issues — like the future of the Bush tax cuts and major changes to Medicare and Medicaid — for later. “This is not our ideal plan ... but there are a limited amount of moving pieces that can be used,” Kessler explains. He casts the plan as an alternative between “go big” and “don’t do anything at all,” saying that it’s a false dichotomy that excludes a more moderate compromise.

There are some parts of the Third Way plan that supercommittee Democrats and Republicans have already put on the table: It lowers the mortgage-interest deduction, which Republicans have floated. It uses chained-CPI for calculating Social Security benefits and raises Medicare premiums for wealthier beneficiaries, which both parties have considered. A full outline of the entire plan is available here.

But there are potential dealbreakers throughout, particularly in light of the GOP’s aversion to tax increases. The proposal eliminates an estate-tax exemption that builds on the Bush tax cuts, for instance. And it raises some $50 billion in revenue through eliminating subsidies to ethanol, coal, oil and other energy industries. Although the Third Way lifted many of those energy revenues from Coburn’s own plan, the Oklahoma Republican is still something of a fiscal outlier within his own party. When Coburn tried to eliminate ethanol subsidies this year, it sparked a fierce backlash from other Republicans.

Ultimately, the supercommittee’s willingness to consider such an alternative will depend on how averse both parties really are to the trigger. And it’s not clear that it’s enough to scare either side into submission. Kessler, for his part, says he’s gotten “some receptivity” from the supercommittee members and its staff about his plan but says some of the feedback is decidedly “cryptic.” He concludes: “We’ve had contact from them, but it’s a like a jury. ‘Hi honey, how was jury duty?’ ‘I can’t talk about it.’ ”

 
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