“We’re not going to save our defense unless we go along with the president’s wishes to raise taxes on small business,” said Sen. Jim DeMint (R-S.C.), a leader of the tea party movement. “It’s not a good choice. I would never support it. . . . [But] there are enough Republicans, I think, who are so afraid of defense cuts that they would probably give in.”
After nearly two years of gridlock, the anticipation of movement on the debt has touched off a frenzy of hopeful activity. The “Gang of Six” senators who have long labored to bring a bipartisan debt-reduction plan to a vote are back at work with an expanded membership that includes Sens. Lamar Alexander (R-Tenn.) and Michael F. Bennet (D-Colo.). Meanwhile, Corker is one of several senators circulating his own proposal to restrain spending on health-care and retirement programs, overhaul the tax code and significantly reduce future borrowing.
“I detect among my colleagues a growing sense of urgency,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.), a Gang of Six member.
Without congressional action, the nation faces the largest dose of fiscal austerity in more than 40 years, a budgetary spasm that could trigger a significant recession. A host of tax cuts are set to expire on Dec. 31, ranging from the lower income tax rates adopted under George W. Bush to the temporary payroll tax holiday that currently increases the average paycheck by 2 percent.
In addition, as part of last summer’s deal to raise the debt limit, Congress ordered the White House to make across-the-board cuts to agency budgets totaling $110 billion next year, with the pain inflicted evenly on domestic and defense programs.
Although this “fiscal cliff” could damage the economy, it would do wonders for the budget deficit. So the Gang of Six senators and others are working to develop a post-election strategy that would do three things:
●Postpone the automatic spending cuts and some of the tax increases for about six months, giving lawmakers time to enact a comprehensive debt-reduction plan.
●Cover the cost of postponing the automatic spending cuts and tax increases so the deficit does not increase during the six months.
●Automatically carry out a new debt-reduction plan if Congress does not act within six months. The new plan could look a lot like the recommendations of Obama’s independent fiscal commission, lawmakers said.
Administration officials declined to comment on planning for the fiscal cliff. But key Democrats and others who have met recently with White House officials say Obama is likely to act fast to propose such a plan on his own if he wins in November.
The president wants “to finally address this,” said Sen. Richard J. Durbin (D-Ill.), a Gang of Six member and an Obama ally. “They believe — most of us believe — if we can find a way to reach this goal that doesn’t kill off the recovery . . . but puts the dramatic signal to the world that we have finally come to grips with this, it will launch an even greater economic recovery.”