Wonkbook: Simpson-Bowles can't make the budget debate bipartisan

at 08:11 AM ET, 04/19/2012

Wednesday could have been the day that the budget debate turned bipartisan. Instead, it was the day that the debate proved itself immune to attempts at bipartisanship.


Senate Budget Chairman Kent Conrad (D-ND) speaks about FY2013 spending levels at a news conference on March 20 in Washington. (T.J. Kirkpatrick - GETTY IMAGES)
At 2 p.m., Kent Conrad, chairman of the Senate Budget Committee, began marking up the Simpson-Bowles plan. "What I am proposing is not partisan," he said in a statement. "I am trying to break from the ‘business as usual’ practice that has gone on for too long." But 'business as usual asserted itself in a hurry.

As the Committee's Republicans pointed out, this was a peculiar kind of mark up: There were no amendments allowed, and no vote scheduled. "I've got to say how deeply disappointed we are that we can't go forward with the kind of mark up that seems justified, that we can't offer amendments, that we can't offer alternatives," said Sen. Jeff Sessions, the Budget Committee's top Republican.

But Sessions wasn't looking to pass the bill. He hated it. Hours before the hearing, the minority web site for the Committee, which Sessions' staff controls, led with this headline: "Chairman Conrad’s Budget Proposal: More Taxes Than President’s Budget, No Spending Cuts, No Structural Reform." Their Twitter account was similarly harsh: "Note: Relative to the House fiscal commission plan that failed 38-382, Chairman Conrad's plan spends $671bn more and taxes $899bn more."

This is what the White House, incidentally, always argued would happen if they embraced Simpson-Bowles: As soon as Republicans saw the tax increases (not to mention the defense cuts) embedded in the proposal, they would run the other way, and while they ran, they would be calling the Democrats tax hikers over their shoulder. And that's pretty much what's happened in both the House and Senate efforts to consider the plan.

Republicans are agog that Senate Democrats have been so absent in the budget debate. They can't believe that, in a period of record deficits, Senate Democrats won't offer a vision and defend it through a normal budget process.

But they don't want Senate Democrats to pass a budget. After all, they loathe everything Obama and the Democrats have even hinted at putting forward. They want Senate Democrats to offer a budget that they can attack. They want a budget process where they can force Senate Democrats to take embarrassing and uncomfortable votes. And then, ideally, they want that budget to fail, as that way, they can keep making fun of the Democrats for their inability to pass a budget.

Senate Democrats, who feel that the work of the budget was done when the 2011 Budget Control Act set spending levels for next year, look at this plan and don't exactly see the upside for them. Plus, they see a different, and more consequential, budget fight coming.

Consider the amendments Sessions wanted to offer. The Hill reported that one would have repealed the health-reform law. Another was related to the GSA scandal. A third would have lowered pending limits below the levels the two parties agreed to in the 2011 Budget Control Act.

That last one is the most important: On Wednesday, the Obama administration sent Congress a letter saying the president would veto any appropriations bills that didn't attempted to undercut the Budget Control Act. To Democrats, that bipartisan deal, which ended the debt-ceiling standoff, set spending for the next two years, and the GOP is reneging on its word. Republicans counter that they consider the BCA as a ceiling on spending, not a floor, and they have every intention of trying to cut spending further.

Which is all to say that, on Wednesday, Conrad tried to do what so many in Washington said was necessary: Move to Simpson-Bowles. Make this debate bipartisan. Instead, Simpson-Bowles got trashed by Republicans and jammed into a protected, partisan process by Democrats. And the GOP provided more evidence that they want to undercut the Budget Control Act, which means we're headed to a showdown over appropriations, and soon. Attempts at bipartisanship, in other words, showed just how partisan this issue really is.

Top stories

1) Obama pledged to veto appropriations bills that don't follow the debt agreement. "The post-election budget wars suddenly felt closer Wednesday, as the White House threw down the gauntlet on appropriations and House Republicans voted to shift tens of billions of dollars from poverty programs to help stave off automatic cuts threatening the Pentagon in January...In its bluntest language to date, the administration said that President Barack Obama will not sign any new appropriations bills until the House Republican leadership moves back to the spending targets agreed to in last summer’s debt accords...The message was conveyed in a letter from Jeffrey Zients, the acting budget director, to the joint leadership of the House and Senate Appropriations Committees. The two panels have begun writing their bills for 2013 this week, and the White House wants to head off any notion that Obama will accept a piecemeal approach in which some domestic bills are signed while others are doomed to deep cuts in year-end negotiations." David Rogers in Politico.

2) Kent Conrad's push for Simpson-Bowles is a case study in congressional dysfunction. "Sen. Kent Conrad reclaimed the Budget Committee gavel in 2007, setting out to tame the federal debt and turn staggering deficits into a surplus in five years. But as the North Dakota Democrat rolls out the final budget of his career on Wednesday, it’s clear none of those goals has been realized...The Democratic-led Senate hasn’t passed a budget blueprint since April 2009, and it won’t do so again this spring as election-year pressures consume Capitol Hill. In fact, Conrad’s budget 'markup' Wednesday won’t even be a real markup because senators won’t actually offer amendments or vote. The 10-year budget plan Conrad unveiled Tuesday is based on the so-called Bowles-Simpson deficit-reduction plan, though the chairman conceded it’s 'just reality' that any real deficit work by his committee will likely be put off until after November." Scott Wong in Politico.

INTERVIEW: Kent Conrad on whether Simpson-Bowles can pass the Senate.

3) The House passed a highway bill extension with a mandate to build Keystone XL. "Defying a White House veto threat, the House on Wednesday passed legislation that extends transportation program funding through September and mandates construction of a controversial oil pipeline from Canada to the Gulf Coast. All but 14 Republicans, with support from 69 Democrats, voted 293-127 for legislation that falls far short of Speaker John Boehner’s (R-Ohio) earlier plan to move a sweeping five-year, $260 billion package. But Boehner’s retreat serves two crucial tactical and political purposes for the Speaker. It sets up talks with the Senate on the highway bill and keeps the Keystone pipeline -- a centerpiece of GOP attacks on White House energy policy -- front and center ahead of the November election. Republican leaders hailed the bipartisan vote as a rebuke of President Obama. Two senior Democrat leaders, Reps. James Clyburn (S.C.) and John Larson (Conn.), approved the measure." Ben Geman, Russell Berman, and Keith Laing in The Hill.

@BobCusack: Most surprising development of the day: 69 Dems, including Clyburn and Larson, back Keystone-highway bill, which drew Obama veto threat.

4) The EPA announced curbs on fracking. "On Wednesday, the EPA finalized its first-ever rules on air pollution from natural gas wells and offered hints of its approach on this — the government plans to tread quite cautiously. Typically, a fracking well is developed in two stages. First, the drillers use high-powered injections of water, chemicals and sand to crack the underground shale rock and release the gas. Then, there’s a process known as “flowback” in which gas and other chemicals rise to the surface. This second stage, which can take anywhere from 3 to 10 days, can lead to the release of heat-trapping methane and 'volatile organic compounds' such as benzene into the air. The latter can produce smog and create various health problems. The newest EPA rules will regulate these volatile organic compounds, but they’ll also give the industry more time to comply than had been previously proposed. For the next two years, all gas producers will have to burn, or flare, their wasted gas and reduce certain hazardous compounds by 95 percent. Then, starting in 2015, gas producers will have to undertake a more comprehensive strategy known as “green completion,” in which they capture leaked and vented gas in order to resell it. About half of drilling companies already do some version of this." Brad Plumer in The Washington Post.

5) Mortgage applications jumped. "Mortgage applications jumped last week as historically low mortgage rates fueled a pick-up in refinancing. Overall, applications were up 6.9 percent for the week ending April 13, as refinancing increased 13.5 percent, the Mortgage Bankers Association (MBA) reported Wednesday. Meanwhile, the purchase index decreased 11.2 percent from a week earlier and was 13.9 percent lower than the same week last year...Survey participants said about 32 percent of this refinance volume was for Home Affordable Refinance Program (HARP) loans. Purchase activity declined sharply, due mostly to a 23 percent drop in applications for Federal Housing Administration (FHA) purchase loans, the largest weekly drop in the government purchase index since the expiration of the first-time homebuyer tax credit in May 2010. The demand for conventional purchase loans was down slightly, according to MBA." Vicki Needham in The Hill.

@NickTimiraos: Bad news: Home-purchase loan apps down 13.9% from year ago. Dropped by 11.2% last week after new FHA fees took effect.

Top op-eds

1) KLEIN: Taxmageddon may be the best way to get tax reform. "Before we can even discuss what a new tax code should look like, we somehow need to resolve the most polarizing question in American politics: Should taxes be higher or lower? It’s extremely unlikely that the two parties will come to an agreement on their own. Luckily, they don’t have to. If they simply continue to disagree, at the end of this year the Bush tax cuts will expire, and two of the competing baselines will fade away, leaving only the CBO’s standing. Some Republican staff members say, though they oppose this outcome, it would actually make tax reform easier by enabling both parties to sell reform as a huge tax cut that reverses the expiration of most of the Bush tax cuts...It’s sad to think that the only way to save the tax code might be to let it collapse at the end of the year. But that doesn’t mean it isn’t true." Ezra Klein in The Washington Post.

2) DIONNE: Parents work because they have to. "Instead of fighting a phony mommy war over what Hilary Rosen said about Ann Romney, we should face the fact that most families these days cannot afford to have one parent stay home with the kids. This is not about 'lifestyle' or 'values.' This is an economic struggle highlighting yet again the social costs arising from decades of stagnating or declining wages and growing income inequality. There is a profound class bias in our discussion of what mothers should or should not do. The public debate seems premised on the idea that all two-parent families have a choice as to whether one or both work. That’s still true for the better-off. But this choice is denied to most American families. They have had to send two people into the workforce whether they wanted to or not...So here’s the deal: If you want more households in which one parent can stay home with the kids, you need to boost the incomes of average American families -- and especially of poorer families." E.J. Dionne Jr. in The Washington Post.


3) OREMUS: The latest cybersecurity bill is flawed. "SOPA was primarily about intellectual property. The bill would have given digital rights-holders--record companies and film studios, for instance--sweeping power to go after websites that appeared to 'enable or facilitate' copyright infringement. Those that didn’t comply could be blacklisted...CISPA, in contrast, is about cybersecurity, not your bootleg copy of Avatar. Its main goal is not to protect copyright-holders’ profits, but to protect websites and the government from hackers. Early incarnations of the bill set SOPA opponents on edge with a line about protecting intellectual property. But its bipartisan sponsors, Reps. Mike Rogers of Michigan and Dutch Ruppersberger of Maryland, wisely edited CISPA last week to remove that mention. It should now be clear to all but the most paranoid that CISPA isn’t SOPA 2.0. At this point, to label it as such is to both miss the bill’s legitimate aim and to overlook the bill’s real potential harms." Will Oremus in Slate.

4) WILL: Majority rule conflicts with self-government. "Granted, where politics operates -- where collective decisions are made for the polity -- majorities should generally have their way. But a vast portion of life should be exempt from control by majorities. And when the political branches do not respect a capacious zone of private sovereignty, courts should police the zone’s borders. Otherwise, individuals’ self-governance of themselves is sacrificed to self-government understood merely as a prerogative of majorities. The Constitution is a companion of the Declaration of Independence and should be construed as an implementation of the Declaration’s premises, which include: Government exists not to confer rights but to 'secure' preexisting rights; the fundamental rights concern the liberty of individuals, not the prerogatives of the collectivity -- least of all when it acts to the detriment of individual liberty." George Will in The Washington Post.

5) MEYERSON: We can boost middle class incomes. "So how do we re-create the American middle class? Making our loopy tax code more equitable appears to be off the agenda, what with Senate Republicans’ refusal Monday to allow a vote on a tax hike for millionaires. And even if the 'Buffett Rule' were enacted, it would do nothing to alter the rocketing inequality in Americans’ pre-tax income...Recently, though, two proposals have emerged that could boost Americans’ incomes. One -- part of an omnibus stimulus measure from Sen. Tom Harkin (D-Iowa) -- would raise the minimum wage and index it to the cost of living. The second, laid out in the new book 'Why Labor Organizing Should Be a Civil Right,' by Richard Kahlenberg and Moshe Marvit, would extend the employment protections of the Civil Rights Act -- which forbids firing workers for reasons of race, gender, age and disability -- to workers seeking to join a union." Harold Meyerson in The Washington Post.

Minnesota rock interlude: Howler plays "Back Of Your Neck" live on WFUV.

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Still to come: Overseas hiring is up; states hold off on exchanges; the Violence Against Women Act is up next; gas prices may drop further; and a baby hippo just wants to dance.

Economy

Romney's plans to eliminate deductions wouldn't pay for his tax cuts. "Romney has said that his plan to cut taxes by 20 percent across the board will be revenue neutral...But he hasn’t publicly said which loopholes or deductions he’d eliminate to do this. At the fundraiser, Romney opened up to his donors a bit on this score: 'I’m going to probably eliminate for high income people the second home mortgage deduction,' Romney said...So how much of the cost of Romney’s tax cuts would be covered by the elimination of these deductions? Only one-tenth, according to a tax expert I spoke to today. The nonpartisan Tax Policy Center has estimated that Romney’s tax cuts would cost $480 billion in revenue in 2015, relative to current policy, and could even grow in the years after that. The Tax Policy Center’s Roberton Williams tells me that by his estimate, the measures Romney identified in his chat with donors would save between $45 billion and $50 billion in 2015." Greg Sargent in The Washington Post.

@DLeonhardt: How much $ would Romney's loophole closing raise? 5%-10% of the cost of his tax cuts. Moral: tax reform is hard. http://nyti.ms/IR0Vf6

Investors are betting that QE3 will happen. "For many it’s all over. But a coterie of investors are patiently biding their time and betting that the Federal Reserve will have little choice but to embark on a third round of large-scale bond purchases later this summer. It’s a stance predicated on the US economy repeating its pattern of the past two summers and entering a soft patch, fanning fears of another flirtation with deflation as consumers and homeowners pay down their debts. Also playing a potential role are the problems in the eurozone, with any contagion from the region seen provoking a response from the Fed. Either way, a decision does not look imminent. When Fed policy makers meet next week for two days, investors generally expect the central bank will keep its options open for their following gathering in June. By then, the tone of economic data, particularly on jobs, will be clearer." Michael Mackenzie and Dan McCrum in The Financial Times.

@AndyHarless: The Fed won't march into Purgatory (unconventional stimulus) unless it thinks the alternative is Hell (deflation, massive, endless unc stim)

U.S. companies boosted their overseas hiring. "U.S.-based multinational companies increased their work forces at home by 0.1% in 2010 while expanding overseas employment by 1.5%, the Commerce Department said Wednesday. The modest expansion of the global companies' employment in the U.S. came in a year when the private sector as a whole shed 0.6% of its U.S. workers. In all, U.S.-based multinationals account for about one-fifth of private employment in the U.S., with 23 million U.S. workers and 11 million in majority-owned affiliates overseas. The government data is preliminary and often revised significantly...Since 1999, U.S.-based multinationals have cut U.S. employment by about 1 million, or roughly 4%, and added 3.1 million workers overseas, a 39% increase. Recently, though, the companies have been hiring both at home and abroad, but adding more jobs overseas. Between 2007 and 2010, they added 200,000 U.S. jobs and 600,000 outside the U.S., the government estimates." David Wessel in The Wall Street Journal.

Time lapse interlude: "Perpetual Ocean," a visualization of ocean currents by NASA.

Health Care

Medicare will vastly expand its use of competitive bidding. "The Obama administration said Wednesday that it would vastly expand the use of competitive bidding to buy medical equipment for Medicare beneficiaries after a one-year experiment saved money for taxpayers and patients without harming the quality of care. The experiment represented a sharp break from the usual fee-for-service Medicare program, under which beneficiaries can choose any supplier or provider of goods and services. In the experiment, Medicare officials invited bids and awarded contracts to 356 suppliers of medical equipment in nine metropolitan areas, including Cleveland, Dallas, Miami-Fort Lauderdale and Riverside, Calif. Kathleen Sebelius, the secretary of health and human services, said the pilot program had reduced Medicare costs by 42 percent, or $202 million, by securing lower prices and curbing 'inappropriate utilization' of personal medical equipment in the nine markets." Robert Pear in The New York Times.

Wonkbook real talk: Both Paul Ryan's Medicare plans and the Affordable Care Act are based around competitive bidding.

The Senate might vote on Paul Ryan's Medicare plan. "Congressional Republicans are coalescing around a plan for reforming Medicare sponsored by House Budget Committee Chairman Paul Ryan (R-Wis.) and Sen. Ron Wyden (D-Ore.). Sen. Pat Toomey (R-Pa.), an influential voice on budget issues in the Senate, adopted Ryan’s Medicare plan in the budget proposal he unveiled Wednesday. He said he will force the Senate to vote on the proposal later this year by taking advantage of a rule that allows any senator to offer a budget if the Budget Committee fails to act. Senate Democrats do not plan to schedule a vote on their own budget measure. Last year, Toomey’s budget eschewed the controversial Medicare reforms included in the House Republicans’ fiscal year 2012 budget. He called for a 10-year, $300 billion fix to eliminate scheduled cuts in doctor payments but otherwise preserved Medicare’s status quo." Alexander Bolton in The Hill.

Many states are holding off building their exchanges. "Two years into the law’s implementation, conservative emissaries have contributed to impressive stats. Almost all red states are holding off on exchange legislation at least until the Supreme Court decides on the Affordable Care Act, and in most of those states, exchange-building legislation has crawled to a stop. Both funded partly by the Koch brothers, Cato and ALEC form the cavalry that state-based conservative organizations call in to convert Republican lawmakers who have been considering establishing exchanges. While they’re no fans of the federal law, many Republicans in state government thought it was better to set up their own exchange than to let the Department of Health and Human Services do it for them if the law survives past 2012. Some still think that -- and disagree with some of the assumptions and interpretations the fly-in conservatives are making." Lester Feder and Jason Millman in Politico.

Congress is mulling the reauthorization of a fee to fund drug approvals. "Right now, there’s a big health policy battle brewing on the Hill. It’s not about Obamacare. It has nothing to do with repeal -- and everything to do with PDUFA, a very important law with a very funny name. Try and get past the quirky acronym, which sounds more like a children’s cartoon character than a crucial piece of health policy. Because PDUFA is actually quite serious. It stands for the Prescription Drug User Fee Act. It generates the vast majority of the federal government’s budget for reviewing new medications. And so it plays a huge role in determining how safe our health-care system is, and how quickly we get access to new drugs. Here’s the quick backstory on PDUFA: It dates back to the early 1990s, when pharmaceuticals were getting frustrated with the long waits for drug approvals. It took about two years, and the FDA said it was largely a matter of resources: They just didn’t have enough staff to move faster." Sarah Kliff in The Washington Post.

A new bill could allow patients to sue generic drug companies. "Democrats in the Senate and House introduced companion bills Wednesday that would permit generic drug companies to update warning information about the drugs they manufacture, a change that could allow patients to sue the companies for failing to warn about the risks of taking their drugs. A Supreme Court decision last year, Pliva v. Mensing, barred patients from suing generic drug companies because the court ruled that the companies did not have control over what their labels said and therefore could not be sued for failing to alert patients about the drugs’ risks. An earlier Supreme Court decision, by contrast, gave permission to patients who took brand-name drugs to sue the drug manufacturers. Since the decision last year, dozens of judges have thrown out cases filed by patients who claim they were harmed by generic drugs even though in many cases they suffered the same injuries as those who took the brand-name versions." Katie Thomas in The New York Times.

@drgrist: If you offload massive, rising healthcare costs from public to private budgets, have you really solved a problem?

Domestic Policy

The Senate will take up the Violence Against Women Act next week. "Senate Republicans are divided on legislation to renew the Violence Against Women Act, which was first passed in 1994 and included criminal penalties and grants to fight domestic violence and sexual assault. All eight Republicans on the Judiciary Committee voted no in committee in February, while eight other GOP senators are co-sponsoring it. Some Republicans say they want to support the law, but that Democrats have added provisions that they know GOP lawmakers cannot accept. Among them is a proposal to raise the cap on visas granted to illegal immigrants within the U.S. who are suffering from domestic abuse. The cap would climb to 15,000 from 10,000 by recapturing unused visas from past years. The Senate is scheduled to debate the bill next week, and it is expected to pass with some GOP support. If so, Democrats plan to use the bipartisan vote to pressure House Republicans to go along or risk being labeled insensitive to women's issues." Naftali Bendavid in The Wall Street Journal.

House Republicans are resisting mandates for cybersecurity. "House Republican leaders are standing firm against intense pressure from the White House to embrace regulatory mandates for cybersecurity. The Obama administration is leaning on Congress to pass legislation that would require some private companies to meet minimum standards for protecting their computer networks...But GOP leaders in the House are opposed to adding more regulatory mandates on private businesses and are moving forward with cybersecurity legislation next week that would be purely voluntary...The House is expected to vote next week on the Cyber Intelligence Sharing and Protection Act (CISPA). The bill, authored by House Intelligence Committee Chairman Mike Rogers (R-Mich.), would encourage companies to share information about cyber threats, but would not make the disclosures mandatory. The Obama administration criticized the bill in a statement Tuesday evening, arguing it is inadequate." Brendan Sasso in The Hill.

Adorable animals dancing interlude: A baby hippo is quite skilled at water ballet

Energy

Gasoline futures prices point to lower gas prices around the bend. "After a sizzling start to the year, gasoline futures prices are sliding, easing pressures on drivers and the U.S. economy and raising the prospect that prices at the pump could be headed lower still. Gasoline futures, a key yardstick for wholesale prices, are down 6.3% from their high for the year reached on March 26, as the price of crude oil that gets refined into gasoline has dropped a similar amount...The average cost of a gallon of gas nationwide has fallen for two straight weeks, according to the U.S. Energy Information Administration. As of Monday, the average retail price of regular gasoline was $3.922 a gallon, down from $3.941 on April 2, the EIA said...Joanne Shore, a senior analyst of the EIA, says retail prices typically lag behind those of gasoline futures by a few weeks. About half of the change in futures gets passed through within a week, and the rest tends to show up over the next several weeks." Liam Pleven and Carolyn Cui in The Wall Street Journal.

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

 
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