U.S. Senator Tom Coburn and Grover Norquist
As I type this, Vice President Joe Biden is one floor below me, cloistered in a room with congressional negotiators trying to work out a deal to slash deficits and raise the debt ceiling before the Aug. 2 deadline, when the Treasury would start to default on U.S. obligations. The group will meet again Wednesday, Thursday and have been asked to clear their schedules Friday, just in case. The House is expected to recess next week, but House negotiators have agreed to stay behind so the talks can continue. Why the big rush?
Biden’s group is working to create a menu of options for President Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid to consider – so, really, the actual negotiations have yet to even start. And the last time Congress attempted deficit reduction the bill took a month to draft, let alone to debate and pass it through both chambers. Negotiators, aware of the deadline pressure, have acknowledged that a short term extension may become necessary, after they come to a long-term agreement, in order to work through the logistical challenges of such a massive bill.
And long-term is really the only option left on the table. House Majority Leader Eric Cantor Tuesday ruled out a series of short-term extensions. “I don’t see how multiple increases in the debt ceiling can help up with the big changes that are needed,” Cantor told reporters. Up until this point drawing the process out into several smaller voters closer to the election, so as to keep the issue – a winner for Republicans – at the forefront – had been an effective GOP negotiating threat. Cantor’s about face reflects his Tea Party-infused freshman class, many of whom believe they were sent to Washington to stop – not help — President Obama from spending more. “Getting more than one or two debt ceiling votes out of most of these guys would be tough,” said a chief-of-staff to one GOP freshman.
As negotiators put together the menu, which includes trillions of dollars in cuts, the selections have suddenly expanded. For months, Alan Simpson, the co-chair of President Obama’s deficit reduction commission, has been warning that the two biggest obstacles to tackling the nation’s staggering debt are Grover Norquist and the AARP. Social Security is one of the few issues on which Democrats lead Republicans in polls these days. Which is probably why the Administration has been insisting that any overhaul of the government-funded retirement program be on a “separate but parallel track” to the deficit reduction discussions. Social Security, they argue, doesn’t currently contribute to the deficit. But, when the Wall Street Journal last Friday reported that AARP had dropped its long-standing opposition to a reduction of Social Security benefits, suddenly the entitlement program was back on the negotiating table. Democrats now have the cover they need with seniors to proceed.
The Republican problem with taxes is more complicated. Norquist heads Americans for Tax Reform, an anti-tax group that has a pledge, signed by most Republicans in Congress, to vote against any legislation that would raise taxes. This may sound straight forward, but it isn’t. Norquist and Senator Tom Coburn, an Oklahoma Republican who sat on the fiscal commission with Simpson, have been warring for months. Coburn made the mistake of pragmatically acknowledging that Republicans would not succeed with slashing trillions of dollars in spending unless Democrats won some significant tax hikes. In the Tea Party era, Coburn’s position is akin to heresy and the once platinum fiscal conservative has been under attack from Norquist and other anti-tax groups. “Coburn’s trying to trick people into tax increases,” Norquist told me Tuesday morning. “He can’t raise taxes. He’s not allowed to raise taxes.”
Coburn last week forced a vote to stop all subsidies to ethanol production and lower U.S. tariffs against ethanol imports. The measure failed, but the interesting thing is that it garnered 34 Republican votes, including all of the GOP leaders. Norquist opposed the Coburn measure because it did not offset the $2.4 billion in new revenues coming back to the Treasury thanks to the repeal – money Coburn said he’d use to pay down the deficit. Until last week, Republicans were so deferent to Norquist’s pledge that they would often call to ask if this or that bill was in compliance. But Norquist’s purist stance has essentially broken his pledge’s stranglehold on legislation. “I’m not for raising taxes on anybody as a matter of just sort of my general orientation,” Senator John Cornyn, head of the National Republican Senatorial Committee, told reporters on Tuesday, “but the fact that you can’t eliminate unneeded and unnecessary subsidies for an industry is a bridge too far.” When asked if he still supports Norquist’s pledge, which he had previously signed on to, Lamar Alexander of Tennessee, the No. 2 Senate Republican, smiled and said, “The only oath I took was the one to serve the people of Tennessee and that’s the only oath I stand by.”
Does this mean that closing tax loopholes and subsidies are on the table for the deficit reduction talks? Not necessarily. Just like Social Security isn’t definitely on the menu, either. But it gives negotiators more wiggle room as they try to work out a deal. There are a lot of ideas on the table right now – like changing inflation to be measured by the Consumer Price Index or getting rid of all agricultural subsidies — and the options will surely change dozens of times before the final deal is made. Another new piece are some short term stimulative measures, such as a corprorate payroll tax holiday or a temporary window to allow companies to repatriate profits from abroad tax free, which Democrats are eager to add given the recent gloomy jobs numbers. As both sides profess a hunger for a tasting menu over a simple house salad, the more options, the bigger and better the meal.