Although Obama has urged that the new legislative committee consider a range of options for shrinking the national debt, it’s far from clear that everything will be on the table when the panel, composed of six lawmakers from each party, begins looking for further savings.
In an interview, Senate Majority Leader Harry M. Reid (D-Nev.) said that he would like to “put people on it who are willing to do entitlement cuts . . . people with open minds.” But the GOP’s uncompromising stand against tax increases, he said, “makes it pretty hard for me.”
House Budget Committee Chairman Paul Ryan (R-Wis.) argued that Democrats “have already got their tax increases,” including fresh revenue buried in last year’s health-care overhaul. Ryan said he assumes that Obama and congressional Democrats will make good on their pledge to let the tax cuts that benefit high-income households expire on schedule.
“So their tax increases are coming,” he said. Ryan said the new committee “could do a loophole closer here or there. But there’s no way you’re going to have significant revenues in the picture. You’re not going to get tax reform out of this thing.”
Independent budget analysts held out hope that the committee will revive ambitious debt-reduction goals that would require both political parties to make sacrifices.
“That is the key for people to understand: This is just phase one. This doesn’t get us to the promised land,” said Erskine Bowles, who was Bill Clinton’s White House chief of staff and who served as co-chairman of a commission Obama set up last year to recommend ways to control federal borrowing. “This doesn’t stabilize the debt or reform the tax code or slow the rate of growth of health care. There’s lots of work left to do.”
The debt-limit agreement directs the new committee to identify at least $1.2 trillion in additional savings over the next decade. If the panel does not produce a plan by the end of November — or if Congress does not adopt it by the end of the year — more than $100 billion a year would be cut automatically from the budget, starting in January 2013.
Those reductions would be split evenly between defense and non-defense programs, although many Democratic priorities, such as Medicaid and Social Security, would be exempted. The Pentagon, meanwhile, would take a $54 billion hit in the first year alone.
Democrats said the threat of such large automatic defense cuts would give them powerful leverage to renew their demand that Republicans consider tax increases for corporations and the wealthy as part of a solution to the nation’s budget problems.
“Republicans are going to have to decide whether it’s more important to protect special-interest tax breaks or whether it’s more important to protect the national security of the United States,” said Rep. Chris Van Hollen (Md.), the senior Democrat on the House Budget Committee. “That’s the choice they’re going to have to make.”
In an interview, Senate Minority Leader Mitch McConnell (R-Ky.) agreed that the trigger is “really catastrophic” and that the consequences of not coming up with a bipartisan debt-reduction plan would be “unacceptable.” Referring to the new committee, McConnell said, “We all view this as a real deal.”
But Sen. Jon Kyl (Ariz.), the No. 2 Republican in the Senate — who is widely viewed as one of McConnell’s likely picks to serve on the panel — called the fate of the tax issue uncertain.
“What remains to be seen is whether any discussion of taxes is appropriate,” Kyl said. “I think it’s pretty unlikely.”
Staff writer Paul Kane contributed to this report.