Conrad’s Last Gambit for a Grand Budget Deal
Policy + Politics

Conrad’s Last Gambit for a Grand Budget Deal

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In a swan song of sorts, on Wednesday Senate Budget Committee Chairman Kent Conrad, D-N.D., unveiled his final comprehensive budget plan before retiring at the end of the year.

Few can match Conrad’s understanding of the budget process. “No one in the Congress understands fiscal problems more than Sen. Conrad,” Senate Majority Leader Harry Reid told reporters this week. However, in an era of partisan gridlock and political posturing, Conrad decided not to rebut the House Republicans’ election-year call for more tax relief and deep domestic and health care spending cuts. Instead, he introduced a variation of the bipartisan Bowles-Simpson fiscal commission plan for long-term deficit reduction.

Conrad said he needed to do something to force the two parties “out of their fixed positions” as they head into a tough fall election. “TheFiscal Commission budget plan provides a comprehensive and balanced deficit reduction framework that we can build on,” Conrad said. “It is not perfect, but it does represent a middle-ground, consensus solution to the country’s fiscal imbalance. It brings the deficit down, but does so in a responsible, fair, and balanced way. It protects the most vulnerable. It phases in changes to avoid harming the economy.”  

He acknowledged that his strategy would disappoint or anger lawmakers on both sides of the aisle. “But,” he said, “I am focused on getting a positive result for the American people. And I believe the best way to do that is to start in the middle, with a plan that already has strong bipartisan support, both in Congress and across the nation.”

But a budget deal is unlikely to emerge from the cacophony of debate on Capitol Hill this year. Congress has not passed a concurrent budget resolution in the past three years but instead has operated under a series of patchwork stopgap spending resolutions.

Late last month, House Republicans pushed through a fiscal 2013 budget and tax plan crafted by Rep. Paul Ryan of Wisconsin that offered plenty of GOP  campaign slogans – including deep tax cuts, entitlement reform and protecting defense spending – but no common ground for a budget deal with Democrats and President Obama. The Ryan budget, approved 228 to 191 roughly along party lines, would cut the top tax rate from 35 percent to 25 percent, would recast Medicare and Medicaid, and would impose sweeping cuts in domestic programs for middle- and lower income Americans.

Ryan, the House Budget Committee Chairman, Ways and Means Committee Chairman Dave Camp of Michigan, and other GOP House leaders began moving ahead this week with plans for implementing the budget and tax overhaul proposals, although Senate Democrats say the approach will go nowhere. House members are equally as adamant that the Bowles-Simpson approach is also a non-starter. Reps. James Cooper (D-Tenn.) and Steven LaTourette (R-Ohio) put a variation of the Bowles-Simpson plan to a vote before the House last month. It was crushed on a vote of 382 to 38. Twenty-two of the supporters were Democrats, while 16 were Republicans.

Republicans were overwhelmingly opposed to the original plan because it included $2 trillion in new taxes – as well as expiration of the Bush era tax cuts. It would also cut $800 billion from defense.  Democrats were unhappy with it because it included deep Medicare and Social Security cuts along with large tax increases to address the long-term deficit. 

The Cooper-LaTourette version contained $1 trillion less in new tax revenues and other refinement to try to broaden its appeal. But House Republicans and Democrats weren’t buying it. And there is little reason to believe the plan would get a warmer reception in the Senate.

Conrad nonetheless decided to use Bowles-Simpson as a placeholder to get the budget process going this year in the Senate, even if its prospects for passage are bleak. But in doing so, Conrad is riling some in the Senate Democratic leadership – and it’s not clear the White House is happy about this either.

Some Democratic leaders want to avoid another budget standoff before the November election, as they struggle to retain control of the Senate.  Reid has said repeatedly that the Senate doesn’t need to act on a budget this year.  Congress and the White House agreed last summer to a two-year spending plan with caps and enforcement provisions as part of the deal to raise the federal debt ceiling. Conrad, however, wants more than two years. “What we do not have is agreement on a long-term budget plan,” Conrad pointed out. “That is what we must now work to achieve.”

“The Democrat-controlled Senate’s ongoing failure to pass a budget has become one of the most embarrassing spectacles in Washington,” Ryan said in a statement. “A budget is the most basic function of government, and today’s decision by Chairman Conrad to shrink from responsibility and accountability is especially perilous given the debt-fueled economic crisis staring us in the face. This unserious approach to budgeting has serious consequences for Americans families.”

Conrad, 64, a former state tax commissioner, has been the Senate Democrats’ point man on budget balancing for more than a decade, although the stress of the past two years may have helped him reach a decision to retire after four full terms. Conrad almost single-handedly forced Obama to create the Bowles-Simpson commission, which produced a debt-reduction plan in December 2010 now hailed by budget policy groups and media pundits as a model of bipartisan compromise on taxes and government spending. Conrad then spent months working with like-minded senators to build support for the plan and bring it to a vote.

His efforts failed — and annoyed party leaders, according to the Washington Post. White House officials said Conrad inadvertently muddied their own budding budget deal with House Speaker John Boehner (R-Ohio).  Reid reportedly was worried that Conrad was too eager for an agreement with Republicans and excluded him from last-ditch talks undertaken by a specially created “super committee” last fall.

Now, with his retirement looming in January, Conrad is laying the groundwork for one last push for a grand deficit reduction scheme. He believes that depending on the outcome of the November election, conditions could be right for a major bipartisan plan to rein in the country’s $15.4 trillion national debt. He is again meeting with the Senate’s bipartisan “Gang of Six” and consulting with Republicans and Democrats in the House.  If that too fails, Conrad has indicated he will leave the Senate with no regrets.

“There is nothing I would want more than to reach agreement on a long-term plan right now,” he said yesterday. “And it could be that outside events, such as a crisis overseas, will drive us to come together sooner.  I would certainly be open to reaching conclusion sooner, if that were possible.  But I recognize the chances of that are slim.”

James Horney, a budget expert with the Center on Budget and Policy Priorities said that Conrad will leave behind a legacy of “somebody who really cared about doing something about the budget and dealing with the long-term problem and was willing to consider the kind of balanced approach and compromise that I think ultimately will have to happen. He just had the misfortune of being in the position he was in at a time when getting the Congress to go along with that proved to be extremely difficult – or impossible.”