Even if the deal-making types gain momentum, their efforts may be ignored. | AP Photo
By MANU RAJU | 6/6/12 11:32 PM EDT
A growing number of lawmakers are alarmed that Congress’s do-nothing posture ahead of the year-end fiscal cliff could provoke a massive voter backlash and economic catastrophe if they don’t start laying the groundwork right now to cut a deal.
So behind the scenes, there’s a scramble taking shape.
A dozen senators ranging from Oklahoma Republican Tom Coburn to Delaware Democrat Chris Coons have begun to organize closed-door briefings with leading economic experts to prod Congress into action. Some lawmakers like Sen. Lamar Alexander (R-Tenn.) are quietly pushing to have a major tax and budget package ready by September so a bill can be introduced immediately after the November elections and passed by Christmas. Others like Sen. Bob Corker (R-Tenn.) have taken matters into their own hands by privately preparing bills they hope will shape the post-election debate.
“There’s a genuine concern that a downturn in Europe or another place will force our hand: It’s far better for us to start working on this earlier rather than later, and there’s a lot of work to be done,” Senate Majority Whip Dick Durbin (D-Ill.) told POLITICO. “If we can present something immediately after the election that is a good solid starting point, I think it’s going to restore confidence in the business community.”
The uptick in back-channel talks reflects a growing recognition that the differences over the intractable tax, deficit and entitlement issues must be narrowed ahead of November if there’s any chance to meet a critical Jan. 1 deadline — the so-called fiscal cliff — when $1.2 trillion in automatic spending cuts take effect and Bush-era tax cuts expire on individual tax rates, capital gains and dividends. On top of that, Congress must deal with a hodgepodge of expired business tax breaks and the likelihood that the U.S. will once again hit its debt ceiling, provoking a major fight over the conditions for increasing the federal borrowing limit.
Above all else, they say, these summer talks must be done secretly and never be made public for fear that any new proposals could get swept into the highly toxic partisan atmosphere ahead of a historic presidential election. The secret talks might allow Democrats to entertain deeper cuts to entitlements than they usually would, and Republicans could talk more candidly about increasing tax revenues — without either side getting blasted in the political arena.
“Everyone is kind of holding their cards because we realize that it’s not game time yet,” said Corker, who has spent the past five months privately drafting a bill resembling the 2010 proposal authored by the chairmen of the White House deficit commission, Democrat Erskine Bowles and Republican Alan Simpson. That $4 trillion deficit-cutting plan would lower individual and corporate tax rates but raise revenue by eliminating tax deductions and make changes to entitlements like Social Security and Medicare.
Skeptics, of course, say they’ve heard this all before. The Senate “gangs,” the supercommittee, the deficit commission itself — all of those failed. Durbin and five other senators have been privately meeting since the beginning of 2011 in the hope that the so-called Gang of Six could produce a $4 trillion proposal — but the group never even introduced a bill.
On top of that, the issues are hardly ones that can be dealt with expeditiously. Sharp philosophical differences — whether to raise taxes, how deeply to cut into expensive entitlements like Medicare and Medicaid, the extent to which defense programs should be spared and the level to cap federal discretionary spending levels — have divided the two parties for the better part of a generation. Senate Majority Leader Harry Reid (D-Nev.) reiterated this week that he would only acquiesce to Republican demands to reverse automatic defense cuts if the GOP agreed to consider new taxes, a call immediately rejected by GOP leaders.
A temporary extension of all the Bush tax cuts, as Bill Clinton initially suggested this week, may be all that Congress can muster in a post-election period.
Senate Budget Committee Chairman Kent Conrad (D-N.D.), a member of the Gang of Six, said in an interview that it “might make some sense” to extend all the taxes in the short term if lawmakers need more time to fundamentally reform the current corporate and individual tax system.
“But on a short-term basis, … I think something like that is going to have to be done,” he said of a temporary tax cut extension.
And even if the deal-making types like Sens. Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.) gain momentum, their efforts may very well be ignored by House and Senate leaders and the winner of the battle between President Barack Obama and Mitt Romney.
Still, if there’s a critical mass of lawmakers in the rank and file with their own plan, some say, it would make it harder for the White House and Hill leaders to jam Congress. And that makes the next three months crucial for lawmakers who want to avoid a repeat of the situation that surrounded the Budget Control Act, a deal struck by a handful of leaders and the White House and passed on the eve of a debt default last August despite having barely been vetted on Capitol Hill.
“The question people have is whether we can govern,” Alexander said. “If a bipartisan group of Democrats and Republicans say, ‘President Obama or Gov. Romney, we want you to succeed because if you do, the country succeeds,’ then we are likely to succeed.”
On the first floor of the Senate on Tuesday, the head of the World Bank, Robert Zoellick, and the president of the New York Federal Reserve, William Dudley, implored the more than 30 lawmakers in attendance to begin preparing for a major tax-and-spending deal as conditions in Europe worsened.
“What’s critical is that we use this time between now and the elections to do our homework so we are ready to act after the election,” Conrad said.
Some Republicans — like Pennsylvania Sen. Pat Toomey — are beginning to draft legislation that would overhaul individual tax rates. And in the House, there have been some informal conversations between top GOP officials and Romney campaign aides on how to handle the fiscal cliff during the lame-duck session, sources say.
“Obviously, Mitt Romney will have a lot to do with what kind of tax reform that we can affect,” House Majority Leader Eric Cantor (R-Va.) said. “We can’t, seeing where we’ve been with this administration and the Senate, we’re not under any illusions that they’re going to embrace our kind of tax reform.”
But already, the House has taken a series of actions to bolster the chamber’s negotiating position after the elections. The chamber passed a bill last month to overhaul the automatic spending cuts that would slice $600 billion out of national security programs, and Republicans included language in a defense policy bill to ensure that the issue remains in play during conference negotiations with the Senate.
On top of that, the House is teeing up votes this summer on extending all of the Bush-era tax cuts, and House leaders plan to seize on a plan under development by Ways and Means Committee Chairman Dave Camp (R-Mich.) as its leading GOP proposal to overhaul the Tax Code.
Similarly, in the Senate, Finance Committee Chairman Max Baucus (D-Mont.) plans to lay out his vision for tax reform in a highly anticipated speech next week before the Bipartisan Policy Center, comments that can help shape the course of the lame-duck session. And once the primary is over for Utah Sen. Orrin Hatch later this month, the ranking Republican on the tax-writing committee and Baucus will begin to more seriously engage in end-of-the-year talks, senators say.
“Leadership, political courage,” Sen. Joe Lieberman (I-Conn.) said when asked what it would take to reach a deal on taxes and spending. “If we really want to get enough votes in the Senate to avoid more cuts in defense spending, which will I think jeopardize national security, then you need Democratic votes, and you’re not going to get them unless there’s some increase in revenue.”
Jake Sherman contributed to this report.
Original Post taken from: http://www.politico.com/news/stories/0612/77140.html