But that approach has been stymied by Republicans’ refusal to contemplate higher tax revenue except through stronger economic growth, according to people in both parties who spoke on the condition of anonymity to discuss the private talks.
Without a commitment to additional revenue, Democrats have refused to commit to specific entitlement cuts, these people said, leaving even the most eager dealmakers frustrated and pointing fingers at the other side.
The special congressional debt reduction supercommittee is opening its first meeting with promises to work together to slash the deficit and lift the sluggish economy.(Sept. 8)
Graphic breaks down President Obama’s plan to find more than $3 trillion in budget savings over a decade.
“If it was easy, it would have been done by now. No decisions have been made,” said Sen. Rob Portman (R-Ohio), a former George W. Bush White House budget director and one of the committee’s strongest proponents of a far-reaching deal.
On Wednesday, the supercommittee took testimony from a bipartisan group of senators known as the Gang of Six who forged agreement this year on a plan that included as much as $1.2 trillion in new revenue. But some Republicans in the group have since argued that tax collections would rise solely through economic growth.
After their testimony, there was no sign of a breakthrough.
“The thing that turns the ignition on the car is an upfront agreement that the deal will include significant new revenues and significant new entitlement savings,” said a longtime lobbyist tracking the talks. “The car doesn’t get out of the garage until everyone has joined hands on that fundamental framework. And so far, there’s no movement on that fundamental framework.”
While anxiety about the defense trigger has yet to force movement on taxes, it is increasing pressure for a deal. So far, defense hawks have focused on finding a way around the trigger, with some senior Republicans privately urging the supercommittee to count savings from the drawdown in Iraq and Afghanistan, worth as much as $1.1 trillion over the next decade.
Boehner last week dismissed that approach, saying the reductions are “already going to happen.” House Majority Leader Eric Cantor (R-Va.) has criticized war savings as “gimmicks and accounting tricks.” But some GOP lawmakers privately view them as the best hope for avoiding automatic cuts to defense. Others, such as Sen. John McCain (R-Ariz.), have vowed to defuse the trigger through legislation if the supercommittee fails to act.
Such talk worries some lawmakers and outside budget analysts. If the supercommittee cuts a bad deal that replaces the trigger with budget gimmicks, they said, it would present a far greater threat to public confidence and the economy than if the panel simply failed to act.
Steven Hess, who analyzes sovereign debt for Moody’s, said the credit ratings agency decided to uphold the nation’s AAA rating in August in part because “more than $2 trillion in deficit reduction was at least planned.”
Tinkering with that agreement “would bring added pressure from the financial markets,” said Ken Bentsen, an official with the Securities Industry and Financial Markets Association. Markets, Bentsen said, would begin to fear “that Washington was just abandoning everything.”
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