There will be moments, I am certain, over the next couple of years, in which the holiday spirit won’t be as abundant as it is today. Moreover, we’ve got to make some difficult choices ahead when it comes to tackling the deficit. In some ways, this was easier than some of the tougher choices we’re going to have to make next year. There will be times when we won’t agree, and we’ll have to work through those times together. But the fact is I don’t believe that either party has cornered the market on good ideas. And I want to draw on the best thinking from both sides.Well, except for tax hikes, of course, which are off the table:
The fact that the extension of Bush-era tax cuts was not made permanent means the issue – and its impact on deficits – will not disappear. The down side of the extension is that its time frame coincides with the electoral cycle. Some deficit hawks worry that, just as this time, political pressures will make it impossible to address in a fiscally responsible way. But two years from now, much will depend on where the economy and the longer-term fiscal picture stand.But I'm sure there are many good bipartisan ideas for "fixing" the deficit without raising taxes:
A bipartisan group of more than 20 senators has been meeting since July to try to push for fiscal discipline. The senators’ effort to require the Senate to address comprehensively the deficit, spending cuts, and tax reform in 2011 failed to make it into the two-year tax-cut legislation signed Friday, but they will keep pushing for action.
Senate majority leader Harry Reid’s forced retreat on an omnibus spending bill over earmarks – pet projects inserted by senators of both parties – shows that a new day has dawned on spending. True, the $8 billion in earmarks represented less than 1 percent of the $1.1 trillion bill, and the Republicans had already signed off long ago on that overall $1.1 trillion figure. Democrats argue that spending cuts could hamper the economic recovery. But, deficit hawks argue, the time for belt-tightening is long overdue...
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, also says she’s holding on to “slight optimism” over the fiscal situation.
Ms. MacGuineas points to the bipartisan Senate group, led by Sens. Mark Warner (D) of Virginia and Saxby Chambliss (R) of Georgia, as a welcome sign that the efforts of the president’s fiscal commission won’t go to waste. MacGuineas has advised the senators.
“It seems the remarkably good work of the fiscal commission could have died a slow and quiet death if not for this bipartisan group of champions,” she says. “I don’t know that anyone was expecting this, but there appears to be a very serious effort under way in the Senate to keep the momentum of this work alive.”
Many of the senators from the group spoke from the Senate floor before the tax-cut bill passed, urging deficit reduction measures next year.
“It is time for us in the Senate – and excuse the language – to put up or shut up,” said Senator Warner.
A confluence of facts and events helped McConnell convince senior appropriators in his own party -- people who, like he, don't fundamentally oppose the earmarking process -- to back off the omnibus, according to a Republican leadership aide. Part of it was that, though bipartisan, the bill itself included funding for key Democratic priorities that in the current political environment no Republican supports, or wants to be accused of supporting. The omnibus included $1 billion in spending to implement the health care law -- a provision no Republican wanted to de facto support.
"Health care money helped a lot....it added on to the urgency," the aide said.
Meanwhile, by picking longer-term political fights with GOP earmark flipfloppers, Democrats were in some ways harming their own short-term cause.
"Dems were pitching the Republican earmarks to anybody who'd listen," the aide said. "What it did was it branded the bill as, if you look at the headlines, "Earmark-Laden Spending Bill" -- an albatross Republicans were all too happy to hang around Democratic necks.
"They helped us do it -- they were complicit in that."
The public believes that the President is sincere in wanting to reduce the budget deficit because he is, in fact, sincere in wanting to reduce the budget deficit. He talks about it being in the medium term, but his opponents in the GOP want that to happen immediately, to cancel out the stimulative effects of this bill. John Boehner said today that he would like to cut spending to 2008 levels “as soon as possible.” Congress will have to fund the government early next year, if a short-term continuing resolution passes as expected.The fact that health care implementation money and money funding the war in Afghanistan was part of the omnibus spending bill which crashed and burned offers even more hostage-taking opportunities for the GOP. And then there’s this rumor, which I’ve heard as well:
Now the Republicans have identified their next hostage: They’re going to threaten to destroy the international financial stability of the United States by refusing to raise the debt ceiling. What are they demanding for ransom? They want President Obama to slash Social Security and Medicare before this next hostage crisis comes to a head in March or April.
As the story goes, the deficit frauds are already teaming up to basically implement much of the catfood commission recommendations and attach that bill to the debt limit increase this spring. The White House has not publicly stated support or opposition to this plan, and so the planning continues, with deficit frauds in both parties, from Kent Conrad to Paul Ryan, teaming up for basically leverage the moment. In the midst of this crisis, the President will muse about not harming the hostages by ruining the full faith and credit of the US government, and austerity will get enacted. It could look a lot like the tax cut bill, in terms of the speed with which it sails through Congress.
Steny Hoyer’s already talking about tax reform, and that might be a part of this as well. But the real blow would come from massive social spending cuts, including to entitlements, in the very near term, canceling out stimulus. People saw the tax cut bill pass and they reasoned that Washington doesn’t care about the deficit. They don’t, but Republicans do care about their job security. And they have to cut spending to prove they can keep it. They also have the imperative to do it to stop the economy from moving and deny Obama a second term.