Could there be a contingency plan for the supercommittee? Two weeks away from the deficit-reduction group’s deadline, members have hit an impasse over revenue that’s fueled the growing predictions of failure. In response, some policy advocates are urging the supercommittee to save itself by pulling a more moderate compromise off the shelf. Third Way — the centrist Democratic think tank — is lobbying the supercommittee to adopt a $1.2 trillion deficit-reduction plan that it titles, “In case of emergency, Break Glass.” The plan doesn’t contain the sweeping changes of the kind of “grand bargain” that both Republicans and Democrats are gunning for, but it does fulfill the supercommittee’s basic mandate by culling ideas from President Obama, Bowles-Simpson, and GOP Sen. Tom Coburn.
There are some parts of the Third Way plan that supercommittee Democrats and Republicans have already put on the table: It lowers the mortgage-interest deduction, which Republicans have floated. It uses chained-CPI for calculating Social Security benefits and raises Medicare premiums for wealthier beneficiaries, which both parties have considered. A full outline of the entire plan is available here.
But there are potential dealbreakers throughout, particularly in light of the GOP’s aversion to tax increases. The proposal eliminates an estate-tax exemption that builds on the Bush tax cuts, for instance. And it raises some $50 billion in revenue through eliminating subsidies to ethanol, coal, oil and other energy industries. Although the Third Way lifted many of those energy revenues from Coburn’s own plan, the Oklahoma Republican is still something of a fiscal outlier within his own party. When Coburn tried to eliminate ethanol subsidies this year, it sparked a fierce backlash from other Republicans.
Ultimately, the supercommittee’s willingness to consider such an alternative will depend on how averse both parties really are to the trigger. And it’s not clear that it’s enough to scare either side into submission. Kessler, for his part, says he’s gotten “some receptivity” from the supercommittee members and its staff about his plan but says some of the feedback is decidedly “cryptic.” He concludes: “We’ve had contact from them, but it’s a like a jury. ‘Hi honey, how was jury duty?’ ‘I can’t talk about it.’ ”