Congress May Resurrect ‘Tough Medicine’ Deficit Plan
Policy + Politics

Congress May Resurrect ‘Tough Medicine’ Deficit Plan

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Two months have passed since President Obama’s bipartisan deficit commission issued its tough-medicine recommendations for gradually reducing the national debt—a  plan which appeared to be heading for the dead pool, filed a shelf somewhere, gathering dust. Obama didn’t help matters by noting in his State of the Union address on Jan. 25 that “I don’t agree with all their proposals, but they made important progress.”

But recent moves on Capitol Hill by a group of lawmakers determined to bring about major spending savings suggest that it may be premature to put ‘RIP’ on the commission’s recommendations.

“This baby [the debt] is like a worm and
a virus in the system. It’s a stink bomb
in the garden party.  You can’t hide it.”

And in an interview with The Fiscal Times, former Sen. Alan Simpson, R-Wyoming, the commission’s co-chair, sounded upbeat about the prospects that the panel’s belt-tightening ideas  for achieving nearly $4 trillion in deficit reduction through 2020 will be a part of the policy mix as President Obama and members of Congress grapple with the exploding debt and deficit. They’ll have no choice, he said, because – with the Congressional Budget Office now projecting a record $1.5 trillion deficit in fiscal 2011 – the ocean of red ink is getting worse by the day.

“This baby [the debt] is like a worm and a virus in the system,” said Simpson, the ever-colorful former trial lawyer. “It ain’t going away. It’s a stink bomb in the garden party. You can’t hide it.” He added, “You have about 40 guys in there [on Capitol Hill], both parties, working on this baby, working the system. The yeast is in the system.”

Just how willing Congress and the administration are to slash spending during a halting economic recovery will become apparent in the next few months.  Last week, House Budget Committee chairman Paul Ryan, R-Wis., unveiled a plan to cut  $32 billion from  non-defense discretionary spending programs in the current fiscal year – with the State Department, education, housing, transportation and some health-related programs bearing the  brunt.

Next week, Obama unveils his budget plan for the coming 2012 fiscal year, and his budget chief indicated that the president was prepared to make some tough choices. Next month, Congress must act to continue funding the government through the end of the fiscal year, Sept. 30. And some Republicans are threatening to oppose raising the federal debt ceiling unless the administration and Democrats agree to a tough package of spending cuts and savings.

When asked whether, after having spent 18 years in the Senate, he really was optimistic that lawmakers have the political will to tackle a problem of this magnitude, Simpson replied, “They never saw Greece go down in flames. They never saw Ireland. They never knew they had a global economy. They never knew that we would have a hole in the ground like we have right now—all of it is different this time. The pressures are different. A $14 trillion, $500 billion debt – I mean for Christ’s sake, if they can’t figure out this is different, the drinks are on me!”

Simpson’s sentiments are echoed by senators Saxby Chambliss, R-Ga., and Mark Warner, D-Va., who are drafting a proposal that is based on the deficit commission recommendations. “It is the best atmosphere that I have ever seen in my going on 17 years of being here for something like this to get done, just because of the seriousness of it,” Chambliss said in an interview with The Fiscal Times. “You take [Chairman of the Joint Chiefs of Staff] Admiral Mullen’s comment about national security and the number one issue being the debt—if that doesn’t get your attention, then something is wrong with you.”

“Doing nothing is not an option,” Chambliss added. Warner also has made clear in recent days that the commission’s blueprint is the building block for legislation. “We decided we would go ahead and take that commission report though we’ve both got problems with it,” he said on Bloomberg News on January 31. “We’re going to introduce it as legislation and we're not going to let that kind of momentum that was starting to build up fade away.”

“The fact that this plan got 11 out of 18 votes, that it had senators like Mike Crapo and Tom Coburn on the Republican side and Kent Conrad and Dick Durbin on the Democratic side – that’s a fairly broad ideological divide all saying they’re in on this as well,” Warner added. “Everybody's got to have some skin in the game. So the fact that the deficit commission has both spending cuts and tax reform I think says, ‘Let’s starts with this vehicle.’”

Take This Mighty Jump
Warner’s optimism seems to have some basis, given the new political landscape in which congressional leaders as well as Obama’s new economic team have expressed a determination to deal with the fiscal crisis. House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., have made deficit reduction a top priority of Congress this year, and most of the members of Obama’s reconstituted economic  team – including Budget Chief Jacob (“Jack”) Lew, National Economic Council director Gene Sperling, and Treasury Secretary Timothy Geithner – have considerable experience in brokering budget deals.

Still, the presidential fiscal commission's sweeping proposals include combustible ideas such as raising the retirement age for Social Security, eliminating various “loopholes” from the tax code and enacting steep discretionary spending caps to force budget discipline – all ingredients for a bruising fight. 

Warner insisted that such a comprehensive approach is the best way to have a chance at enacting the sweeping steps that are needed. “If you do this bits and pieces, the way the normal congressional process works … the established order, the entrenched interests will probably win the day,” he said on Fox News Channel’s “Happening Now,” on January 25. “If at the end of the day, though, we all kind of link arms in a bipartisan way and say we’re going to take this mighty jump, and I think the American public would back that… That's why Saxby Chambliss and I have joined forces with a whole lot of other senators, close to 20-plus. We’re saying, ‘Let’s take this document as a starting point and go from there.’”

Moment of Truth: Debt Ceiling Decision
Meanwhile, Simpson, who served as the Senate Republican Whip, said the moment of truth will come when lawmakers have to vote on raising the debt ceiling in the spring . “When the debt limit extension comes up, they are going to shriek like gut-shot panthers and leap for the cliffs. They are going to say, `Jesus, I didn’t know that we had this kind of hole.’”

When pressed on what programs lawmakers will cut, Simpson said the newcomers initially will try to avoid making hard choices. “They will say ‘waste, fraud and abuse, foreign aid, earmarks, Air Force One, congressional pensions’ – but that will only get us six percent out of the hole. The grappling will come, because then they have to deal with Medicare, Medicaid, Social Security and defense.”  Asked if he was disappointed in President Obama’s State of the Union speech in that it seemed to duck difficult choices on the deficit, Simpson took issue with that characterization. “He talked about the bipartisan commission, and he also talked about what he was going to cut, when he said, ‘And that won’t even get us near where we have to go,’ or something like that. He mentioned Social Security as a precious thing.”

But while Obama called for a “bipartisan solution” on Social Security, the president also said it must not put at risk “current retirees, the most vulnerable, or people with disabilities,” must not include “slashing benefits for future generations,” and must not subject guaranteed retirement income to “the whims of the stock market.” That doesn’t leave much to work with. Still, it won’t be easy, given the fact that Obama is on the ballot in two years and may be gun-shy about tackling too many contentious issues.

Chambliss expressed disappointment that the president was not bolder. “I was encouraged that he at least addressed the issue, but he had the opportunity to hit a homerun and he didn’t. I think he was playing Wiffle Ball more than baseball when he started talking about the details. I really do think he had an opportunity to say, ‘Folks, we have got to get serious about this and here are some areas that need to be on the table.’ He talked about reducing spending by what, $400 billion—that is a drop in the bucket. We can’t solve this problem with that kind of attitude coming out of the White House.”

Related Links:
Debt Panel’s Simpson Sounds Off (WSJ)
Simpson Calls for Drastic Spending Cuts (Politico)