THE BEST OUTCOME for the showdown over the debt ceiling would have been to seize the moment to secure a pain-all-around bargain encompassing spending cuts, entitlement reform and tax revenue. That may still be possible, but it seems less achievable with every passing day.
Certainly, Republicans’ devoting of valuable time to a draconian, cuts-only “cut, cap and balance” plan that is guaranteed not to become law does not increase the chances of reaching a reasonable agreement. Rather, the more likely scenario seems to be a variation on the unwieldy, responsibility-shifting proposal put forward last week by Senate Minority Leader Mitch McConnell (R-Ky.). The McConnell plan would allow Republicans to avoid causing a default without voting to raise the debt ceiling.
Republicans scuttle negotiations with President Obama
But that “Plan B” is still being tweaked, regarding what additional concessions will be required, now and in the future, as a price of lifting the debt limit. We have always seen a potential upside to the debt ceiling deadline as a forcing mechanism, so we’re not opposed to extracting concessions. But they should be smart ones that pave the way for hard choices that need to be made — specifically tax increases and entitlement reform, including sensible benefit cuts.
One twist to the McConnell plan involves creating a new congressional super-committee — yes, another commission — tasked with producing additional debt reduction measures by the end of the year. Unlike, say, the Simpson-Bowles commission, the committee would not have to achieve a supermajority vote, and its proposals would be subject to an up-or-down majority vote in both houses of Congress.
It is essential that this committee have jurisdiction to consider all elements of the budget: discretionary spending, entitlements and tax revenue must all be on the table, as they were for Simpson-Bowles. If so, then, yes, one more commission with the ability to force Congress to confront reality would be better than none. But we see little reason for optimism that this commission would succeed where others have failed. If lawmakers cannot now agree on the kind of balanced debt-reduction package that every previous commission has recognized is necessary, why would such agreement be within reach several months from now? If there is no prospect of the Republican allergy to new taxes easing, or of many Democrats becoming more open to the kind of entitlement reform President Obama has called necessary, it’s not clear how any balanced proposal is going to make it through Congress.
Another twist involves the House moving, once the Senate has passed its version of the McConnell plan, to tack on another $1 trillion or so in discretionary spending cuts. Some of these may be phantom “savings” from preexisting plans, such as winding down operations in Iraq and Afghanistan. Others may be real and painful. But if the price of averting catastrophe falls entirely on the spending side of the ledger now, that reduces the leverage for obtaining a grander bargain later.
It is too early to make firm judgments because the contours of the deal are fluid and being hammered out behind closed doors. The alternative — not raising the debt ceiling — is unimaginable. But that does not make the latest most-likely outcome any more attractive.