Wonkbook: Democrats' demands and other economic and policy news

By Ezra Klein
Wednesday, March 9, 2011; 7:40 AM

I was wondering when this would finally happen: "Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs." It's about time. There's not much money to begin with in non-security discretionary spending, and because it's such a popular place to search for cuts, there's not much waste, either. It's like trying to clean your house by doing more and more to organize the hallway closet. It might help the first few times, but eventually, you have to head elsewhere.

We're not going to find any real answers to our budget woes by cutting discretionary spending. That's not where the problem is. Entitlements, tax expenditures and rates, and even defense spending make more sense for a deficit-reduction deal. Moreover, if we're looking for deficit reduction, it makes sense to prioritize policies that work over many years, rather than just one year: a bill that saves $100 billion over the next five years is better for the deficit than a bill that saves $60 billion over the next fives months -- and it'll do less damage to a shaky recovery.

But because a more comprehensive deal might include tax increases, Republicans are resisting this broader conversation. "Right now we need to crawl before we can walk, and that means finishing last year's business and complete a spending bill," said Michael Steel, a spokesman for House Speaker John Boehner. "[The Democrats] answer is to raise taxes, not to cut spending, and that's not something anyone else is talking about," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell (and as you'll see in the Bloomberg poll below, that's not quite true: the American people seem to quite like the idea of deficit reduction through taxes on the wealthy). And if you read down in Wonkbook, you'll see a Politico piece on Grover Norquist taking aim at Tom Coburn for considering revenue as part of a tax deal. Tom Coburn!

This might prove a clarifying moment. If Republicans are only willing to consider cuts to non-defense discretionary spending as part of a deficit-reduction deal, then whatever their aim is, it's not really deficit reduction. That's not how you reduce the deficit. If they're only willing to consider deep cuts to this year, as opposed to policies that would save a larger amount of money over the next few years, then it'll raise the possibility that they're motivated more by the specifics of an unwise campaign promise than by concern over the budget. Either "we're broke" or we're not. But if the answer is that we are -- and that's certainly what John Boehner has said in the past -- then it's time we started acting like it. The idea that you can balance the budget simply by doing things liberals don't like and Americans don't notice is a campaign fiction, not a plausible fiscal philosophy.

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The Senate will stage votes on the GOP and Democratic budget proposals today, report Paul Kane and Felicia Sonmez: "Senate leaders delayed until Wednesday consideration of a bill to fund the government through Sept. 30, as Democrats accused Republicans of reneging on an agreement to stage side-by-side votes on two competing plans to cut spending. Senate Majority Leader Harry M. Reid (D-Nev.) charged that GOP senators were afraid to vote on a House proposal to cut $61 billion from domestic agencies over the next six months, a bill Reid derided as the 'tea party plan.'...With a March 18 deadline looming, the White House and Senate Democrats have offered a plan to cut less than $5 billion from domestic agencies through the remainder of the fiscal year, a proposal that even some moderate Democrats have criticized as insufficient in light of record budget deficits."

Senate Democrats want to open up discussions on tax and entitlement reform, reports Janet Hook: "Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs. Senate Majority Leader Harry Reid (D., Nev.) said that efforts to bridge the parties' $50 billion difference in proposed budget cuts for the remainder of fiscal-year 2011 could reach beyond domestic discretionary spending and move into tax policy and programs such as farm subsidies...Sen. Charles Schumer (D., N.Y.) is expected to echo that suggestion in a speech Wednesday and argue that tens of billions of dollars of deficit-reduction measures could be found if budget talks are broadened."

Grover Norquist is targeting Republican Senators working on a debt deal, reports Carrie Budoff Brown: "Coburn and Norquist, two of Washington's most unfailing apostles of starving the government, are locked in a low-grade duel over whether ideological purity on taxes is a realistic position in the face of skyrocketing national debt and growing deficits. Norquist says it's simple: No new taxes means no new taxes. Under no circumstances should Congress raise new revenues to solve the problem, he says. Coburn usually would agree. But when it comes to taming the $14 trillion debt ¿ a challenge Coburn has called 'a matter of national survival' ¿ he won't rule it out...The differences, detailed in an unusual series of letters last month and in interviews with POLITICO, offered the first flicker of what is already a burgeoning debate on the right over the role of taxes in any comprehensive effort to reduce the deficit.

A new Bloomberg poll shows Americans want deficit reduction, bipartisan compromise, and few serious spending cuts: "Almost 8 in 10 people say Republicans and Democrats should reach a compromise on a plan to reduce the federal budget deficit to keep the government running, a Bloomberg National Poll shows. At the same time, lopsided margins oppose cuts to Medicare, education, environmental protection, medical research and community-renewal programs. While Americans say it's important to improve the government's fiscal situation, among the few deficit-reducing moves they back are cutting foreign aid, pulling U.S. troops out of Afghanistan and Iraq, and repealing the Bush-era tax cuts for households earning more than $250,000 a year."

The White House is trying to mend its relationship with the Cabinet, reports Anne Kornblut: "News this week of the first departure of a Cabinet secretary from the Obama administration comes amid a wide-ranging effort under the new chief of staff, William M. Daley, to repair badly frayed relations between the White House and the Cabinet. During the first two years of President Obama's term, the administration fully embraced just a few of his superstar picks - people such as Defense Secretary Robert M. Gates and Education Secretary Arne Duncan. But many more agency chiefs conducted their business in relative anonymity, sometimes after running afoul of White House officials. Both sides were deeply disgruntled. Agency heads privately complained that the White House was a 'fortress' that was unwilling to accept input and that micromanaged their departments."

Still to come: The Senate has passed a patent overhaul; the White House is appealing an anti-health care reform ruling; the Wisconsin battle is spurring recall campaigns; the House GOP's effort to strip the EPA of its power to regulate the climate is moving ahead; and a full crib of baby pandas.


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