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Tuesday, April 26, 2011

Catfood Formula

by digby

Lot's of twaddle today about the deficit ceiling kabuki, but this speculation from the National Journal wraps it all up in the Gang of Six, which sounds reasonable:
The most closely watched fail-safe proposal, however, may come from the bipartisan “Gang of Six” senators. The group, comprised of Conrad and Sens. Mark Warner, D-Va., Dick Durbin, D-Ill., Saxby Chambliss, R-Ga., Mike Crapo, R-Idaho, and Tom Coburn, R-Okla., hopes to release a sweeping plan to cut the deficit as soon as next week. Their proposal, based on a plan offered last year by the heads of Obama's bipartisan fiscal commission, would seek to cut spending by $3 trillion and increase tax revenue by $1 billion over a decade.

Two Senate sources briefed on Gang of Six talks said they expect the senators to propose multiple “pieces,” that could receive votes at separate points this year.

The sources said that in addition to a long-term deficit-cutting plan, the senators are preparing to recommend a relatively simple process under which Congress commits to meet deficit-reduction targets, to both mandatory and discretionary spending over perhaps a decade. The plan would also set targets for revenue increases. It would impose “draconian” cuts if the targets are not met, one senior aide said. That proposal could then be linked to the debt-ceiling vote.

A key to the proposal would be the exclusion of specific cuts. That will allow Congress to defer fights it cannot complete in the next month or two while committing to future reductions.

It remains to be seen how strict the plan would be—Congress has previously created exemptions to limit the effect of similar approaches, like Paygo. But the plan would at least serve the political and legislative means for passage of the debt-limit increase.

Conrad has said he is holding off on offering a budget resolution to see if the gang reaches a deal soon. If it does, a senior Democratic aide said Conrad could then include a fiscal 2012 budget plan in the fail-safe mechanism that would be voted on in conjunction with the debt limit.

The aides said they expected the gang to unveil their both long- and short-term deficit-cutting plans as soon as the middle of next week.

Spokesmen for Coburn, Durbin, Warner, Conrad, and Chambliss said the senators have not reached an agreement, noting that no proposal is agreed on until a complete deal is reached by gang members. The aides said the group may not offer a plan next week. All declined to comment on the specifics of the potential proposal.

In public appearances in recent days, gang members have made it clear that their long-term deficit-cutting plan would include a trade in which Democrats agree to a long-term effort to trim spending on Social Security benefits while GOP members back efforts to increase tax revenue by ending tax deductions or loopholes. The package will not include any increases in tax rates, according to senators and multiple aides.

Well hell, who would have ever predicted that?

Norquist is making noise about how these "tax expenditures" are really tax increases and therefore, violate the pledge, which could really complicate this plan. The truth is that he needn't worry -- the only "exemptions" and "loopholes" that will be ended will be those that hit the parasites and favor liberal interests, but he seems sincere in this, which makes it a heavier lift, at least in the House. They'd probably have to pass this pig with mostly Democratic support. I would actually be fairly sure that the Progressive Caucus would hold the line on this one -=-- there's no upside for Progressives in this deficit reduction hysteria at all -- but that probably means they'll put in some provision that will force them to make another Soloman's choice.

I think the best of all possible worlds for the Republicans would be to vote against the President's deficit reduction plan because it "raises taxes" and have the Democrats take the heat for doing the unpopular thing with both spending cuts a tax hikes. For all the Village nonsense about being "brave" by defying the will of the people, I think they'd be thrilled with a vote for the failed Ryan plan on their record and a vote against a successful plan that can be spun as both raising taxes and cutting Social Security and Medicare. Let's hope the President knows how destructive that would be for him, the Party and the country is planning ahead.

Update: Greg Sargent makes the point, which I think is correct, that the Democrats are trying to thread the needle between the public's conviction that the deficit is an immediate existential crisis and the fact that they don't want their programs cut. But I can't help but point out that the public's perception is the result of Democratic Party political malpractice in that they allowed Pete Peterson to go unanswered for the past two years --- indeed, they actively helped him.

We are in a period of protracted high unemployment, anemic growth and a very sick housing sector that just isn't recovering. Talking about deficits at a time like this is the equivalent of fiddling while Rome burns. And the Democrats have done almost nothing to change this conversation. So they are threading needles of their own making. And I'm not honestly sure they aren't fine with it.

If, in the end, they manage to lift the payroll cap on SS in exchange for cuts in defense or something like that nobody will be happier to give them kudos for savviness than I. But I have a sneaking suspicion that threading this needle isn't going to result in something quite that palatable. Hoping to be wrong, of course, as always.