Washington’s year of drama leaves little done regarding debt

Reid Ribble, a Wisconsin roofing contractor-turned-Republican lawmaker, has helped change the way Washington talks about the national debt. That’s not to say he has done much about the debt itself.

Nearly a year ago, Ribble and other newly elected House Republicans came to Capitol Hill on a single-minded mission to shove the federal debt to the top of the congressional agenda. They succeeded. At every opportunity, they demanded cuts in spending, forcing a series of white-knuckle showdowns that have kept the government in a state of perpetual crisis. Washington nudged close to a public conversation about the kind of government taxpayers want and what they are willing to pay for it.

Last week, however, Ribble went home for the holidays with little to show for all the political drama. The debt stood at $15.1 trillion, $1 trillion more than when he got to town. By the end of next year, projections show, it will grow by an additional $1 trillion. Ribble said he and his allies had cut spending for 2012 by only about $7 billion, a sliver so tiny Ribble could measure its impact in minutes.

“We’ve saved the American taxpayer about 17 hours of spending. That’s it,” he said. “When you just really stop and think about it, we’ve made very little progress.”

Look past 2012, and the budget deals of the past year make a more significant dent. They reduce spending by more than $1 trillion over the next 10 years, the largest debt reduction in two decades. Yet no one, of any ideological stripe, is bragging about the accomplishment. Instead, the Capitol is pervaded by an atmosphere of failure, of opportunity blown.

Despite round after round of negotiations — first over the operating budget, then over the federal debt ceiling and finally in the deficit “supercommittee” that disbanded last month —Republicans and Democrats never resolved the most fundamental budget questions: whether to raise taxes and how to control spending on an aging population.

There was some movement. Some Democrats, including President Obama, conceded that Social Security and Medicare pose a long-term threat if there are no constraints on benefits. Some Republicans, including House Speaker John A. Boehner (R-Ohio), declared themselves willing to talk about raising taxes, a break from the GOP’s long-standing and vigilantly enforced party line.

But Boehner was not able to lead his top lieutenants and unbending freshman class to embrace a compromise on taxes as a first step toward their debt-
reduction goals. In more than a dozen interviews, lawmakers and independent analysts blamed leaders in both parties for failing to seize the moment and then retreating to their respective corners to prepare an election-year assault on the ideas offered by the other side. Many expressed their frustration with an unusual candor that reflected exhaustion as well as disappointment.

“Both major political parties have not been honest about what it’s going to take to fix this,” said Sen. Mark R. Warner (D-Va.), who has led Senate efforts to forge consensus. “Expectations of us are so low, if we could actually show we can put policy ahead of party, I think the reaction would be so positive.”

Sen. Tom Coburn (R-Okla.), another major player in the debt discussions, held out little hope. “Washington is kind of like Las Vegas,” he said. “It brings out the worst in everybody.”

After two years of meetings that left him feeling “like I’m pushing 20 boulders up a hill of ice,” Coburn said he has concluded that “it all comes back to leadership. There is none right now in this country, either Republican or Democrat.”

Even if the GOP were to win the White House and both chambers of Congress in the next election, Coburn predicted that nothing would improve. “They all sit there and do a calculation: ‘If I tell the voters the truth, they won’t like me and they won’t vote for me.’ They say, ‘We can’t do what’s right now, because we won’t have the power to stay up here.’ Well, who cares if you stay up here? If you fix the country’s problems, go home!”

Language as the problem?

When the supercommittee collapsed, many lawmakers viewed it as another colossal embarrassment at a time when approval ratings for Congress were already in the tank.

Made up of six Republicans and six Democrats, the panel had extraordinary powers to cut a deal and push it to final passage. But those close to the process say neither side was able to rally support for the concessions needed to seal a deal.

So Washington will end the year much as it began: bobbing on a rising tide of red ink.

The portion of the debt held by outside investors stands at nearly 70 percent of the economy — more than at any time in U.S. history, except during World War II. Unless taxes rise or spending is cut or the economy expands at a supernatural pace, the debt is projected to grow ever larger as the baby-boom generation moves on to Social Security and Medicare. Analysts predict that investors could soon lose faith in Washington, potentially sparking the sort of debt crisis that is stalking Europe.

A bipartisan plan to stabilize borrowing does exist — several of them, in fact. The most influential came from a commission appointed by Obama and led by former Republican senator Alan Simpson of Wyoming and Erskine Bowles, former chief of staff to President Bill Clinton.

The release of their blueprint last December raised hope that compromise was possible. The plan would increase tax collections while cutting tax rates, slow the growth in Social Security and Medicare spending while protecting the poorest recipients, and slow borrowing through other gradual changes. Cuts would exceed tax hikes by a ratio of about 3 to 1.

But the plan’s hardest trade-offs got limited traction. Then the Republican freshmen arrived, with little interest in carefully calibrated plans. Their hard-line stance hasn’t raised the party’s stock with voters, but it has influenced the race for the Republican presidential nomination. Recently, Simpson said he was appalled to see every contender vow to reject any debt-reduction deal that includes new taxes, even if the ratio of spending cuts to tax increases were 10 to 1.

“This next year is going to be chaos. Absolute chaos,” Simpson said, noting the deepening troubles in Europe. “And to watch my party get up and say, if you had 10 bucks of spending cuts and one buck of tax increases, they wouldn’t take it — it looked like nine robot hands went up out of the mechanical morass.”

Senate Budget Committee Chairman Kent Conrad (D-N.D.), a leading force behind the fiscal commission, said that “the American people still don’t believe you need to make hard choices,” not even after a year when the debt dominated Washington news.

“They believe you should balance the budget,” Conrad said. “But when it comes down to doing the things that need to be done to accomplish that, they don’t support them. Until the American people believe we need to change some things, it’s unlikely we’re going to accomplish them here.”

Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, has been searching for ways to break through to voters. “I was talking to a pollster the other day. He said, ‘The problem is your language. It’s all about austerity. You have to make it about aspiration.’ I was like, ‘Really? I’m pretty sure we need to talk about austerity. Because it’s not going to be all peaches and ice cream when we do this.’ ”

In a perfect world, MacGuineas said, she imagines a presidential address recalling “important moments in history when we made huge decisions that propelled the country forward or screwed us up for years. We’re at one of those moments.”

House Minority Whip Steny H. Hoyer (D-Md.) has delivered speeches like that, stating plainly that solving the problem will require people to pay more for government and get less in return.

But, he said, “I don’t talk in terms of sacrifice. I don’t think we have to make sacrifices. If the middle class were contributing at the rates they were contributing under Bill Clinton, in which they enjoyed the best economic situation they’ve ever been in, we would generate enough dollars to solve our deficit problem.”

Hoyer acknowledged, however, that Obama and the Democrats are not likely to risk campaigning on a return to the higher middle-class tax rates of the 1990s. Instead, Obama has been implying that the debt problem can be solved by raising taxes on the tiny fraction of people earning more than $1 million a year. Republican presidential contenders, meanwhile, are proposing to tame the debt by spending cuts alone, perhaps by eliminating a few federal agencies.

Hunger for leadership

The next major budget crisis is already on the calendar. It is scheduled for January 2013, just after the next election.

That’s when policymakers face a trifecta of politically perilous developments. Deep spending cuts affecting all parts of government are scheduled to take effect, courtesy of this past summer’s Budget Control Act. The George W. Bush-era tax cuts, which benefit virtually every household in America, are set to expire. And the national debt will once again be approaching the legal limit set by Congress.

Ironically, if Congress did nothing at that moment, the debt problem would largely disappear. The expiration of the Bush tax cuts and related provisions would bring in an additional $4 trillion over 10 years. The spending cuts would add savings of more than $1 trillion. Borrowing would slow and the debt would begin to fall as a percentage of the economy by the end of the decade, according to the nonpartisan Congressional Budget Office.

No one expects that to happen, however. Instead, policymakers will be under enormous pressure to come up with more palatable alternatives.

“You have a perfect storm set up for December 2012,” said White House budget director Jacob J. Lew. “I think we’re on a path where it’s almost inevitable within the next 18 months that decisions are made.”

Lew is an optimist, but he may turn out to be right. Ribble, the Wisconsin freshman, has already made one decision. During his campaign last year, Ribble signed a pledge never to raise taxes. He would not sign again, he says. And he is working on a plan to change the tax code by wiping out cherished subsidies.

“I’ve heard this a lot this year: ‘We just have to wait till the next election. We have to wait, we have to wait, we have to wait.’ Well, I think the American people are hungry for someone to lead,” Ribble said. “It’s our job as members of Congress to go back to our districts and communicate why these reforms have to happen.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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