Think the fight over taxes is bad? Just wait until we get to entitlements

November 19, 2012

The fight over the Bush tax cuts may be the biggest stumbling block to averting the austerity crisis. But it isn't the only one. 


(Alex Wong)

If Republicans do agree to a deal on tax revenue, it will be on the condition that Congress and the White House will also make major cuts to spending to reduce the deficit as well, presumably focused on the entitlement side. That's the second big fight that could hold up a deal, particularly as Republicans and Democrats are far from agreeing on what would even be an acceptable overall level of cuts, much less how they would target entitlement programs. 

President Obama has given some indication of the magnitude of spending cuts that he'd consider to be acceptable in a deal to avert the austerity crisis. He's asking for at least $1.6 trillion in tax revenue as part of a $4 trillion deficit reduction package. That would mean roughly $2.4 trillion in spending cuts, and a ratio of cuts to revenue of 1.5 to 1. That's just an estimate, as the president could demand more revenue outside of the tax system, but it gives you a general picture of what Obama is looking for. 

But some Congressional Republicans have already indicated that's far from acceptable. On Friday, Rep. Peter Roskam (R-Ill.)—chief deputy whip and the fourth-ranking House Republican—described a "1 to 3 revenue to cut ratio," criticizing the ongoing debate for focusing almost entirely on the revenue side.

"Where are the spending cuts? Where are the savings?" Roskam said at an event sponsored by the Peterson Foundation. "There hasn't been any discussion about where the cuts are," he added, pressing the president to make "an offering" in terms of entitlement cuts. What's more, if Republicans do cross the Rubicon to raise some tax rates, they could be even more likely to demand bigger entitlement cuts in return.

Meanwhile, some liberal Democrats seem concerned that leaders may already be going too far in terms of spending cuts. Sens. Jay Rockefeller (D-W.V.) and Tom Harkin (D-Iowa)  have been drafting a letter that would ratchet back spending cuts much farther. "Any deal must include a one-to-one ratio of revenues to spending cuts," a draft version of the letter says, according to Roll Call. The senators also are demanding that the $900 billion in spending reductions that have already been enacted as part of the debt-ceiling deal would count toward the spending cuts in the deal. 

Such demands haven't thrilled Senate Majority Leader Harry Reid (D-Nevada), who has advised Rockefeller and Harkin against sending their letter out of concern that it would expose rifts within the Senate Democratic caucus, Roll Call notes. But the rumblings on both the left and right make it clear that the fight over the spending side of a budget deal could be just as bloody as the one on the tax side.

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