Grand bargain: Senators working on deal for tax and entitlement reform?

posted at 4:13 pm on February 17, 2011 by Allahpundit

Can’t tell if this this is the same grand bargain alluded to recently by the New York Review of Books or something new and independent. The NYRB claimed that the White House was working with the Republican leadership on a package whereas today’s Journal piece says a deal’s being brokered by a nucleus of senators including Durbin, Coburn, and Kent Conrad. (Supposedly, more than 40 senators in all have “shown some interest.”) Durbin and Coburn are pals with Obama, though, and all three are refugees from his Deficit Commission, so maybe O is providing input through them while keeping his fingerprints off the negotiations. Remember, given a choice between boldly confronting the domestic challenge of our time and hiding under his desk to make next year’s campaign easier, The One’s preference couldn’t be clearer.

But if this thing starts to build momentum, that’ll have to change, won’t it?

The plan would break the task of deficit reduction into four pieces: a tax code overhaul; discretionary spending cuts; changes to Medicare, Medicaid and other entitlements; and changes to Social Security, aides said. The Social Security system is on firmer financial footing than other major entitlement programs and raises political sensitivities that lawmakers want to deal with separately…

The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates. The committees would be given a target for additional revenues to be raised by the new code. The deficit commission’s version of tax reform would net $180 billion in additional revenues over 10 years.

If Congress failed to enact the tax code overhaul, the legislation would mandate an across-the-board tightening of tax deductions to meet the higher target.

Changes to Medicare, Medicaid and other entitlements such as agriculture subsidies and military and civil service retirement plans would also have to meet fixed targets. Social Security, however, would not incur automatic penalties if lawmakers failed to make changes.

If the Social Security effort failed, the deficit commission’s plan—a mix of raising the level of wages subject to Social Security taxes, slowly increasing the retirement age and other smaller changes—would go to Congress for an up-or-down vote. But there appears to be little appetite for automatic cuts if neither option were to pass.

This is, in other words, not so much a grand bargain to actually enact reforms as it is a legislative framework of “triggers” to force Congress to move ahead with separate reform legislation. If they refuse to rewrite the tax code, poof — a whole bunch of deductions are automatically reduced/eliminated. If they refuse to deal with Social Security, bam — a vote on the Bowles/Simpson deficit reduction plan comes to the floor, where it’ll surely fail but would at least make some people squirm. That Congress is looking for ways to force itself to take up these extremely important matters instead of just going ahead and taking them up tells you everything you need to know about American political leadership right now. (Even Boehner, who’s been admirably bold this week about the sacrifices inherent in spending cuts, is still taking a go-slow “adult conversation” approach on entitlements.) In fact, if the boldfaced number in the blockquote is accurate, this plan will be D.O.A. on the left: $180 billion in new tax revenue over 10 years is nothing, and they’re not going to settle for nothing when deep cuts are coming practically everywhere else. TNR thinks the Journal’s reporting here is simply wrong and that the $180 billion figure will be new tax revenue in year ten alone. Probably correct; over 10 years, that number is a pittance.

Incidentally, Schumer’s already insisting that Social Security (a less imminent threat than Medicare) be removed from the deal, which is (a) predictable insofar as it lowers the political cost of the bargain for the left especially, and (b) insane insofar as it makes sense to do as much as we can right now if, miraculously, the political will to deal seriously with entitlements finally emerges in Congress. I’m skeptical that it will — centrist Republicans are already bugging out and voting with Democrats on relatively minor GOP spending cut proposals — but between the Dems’ own pollsters warning them that the public’s ready to tackle the deficit and mind-boggling news stories like this alerting readers to what Obamanomics means in practice, they’re under some pressure. Maybe they’ll cave. Even an eeyoreblogger can have hope, my friends.

Speaking of mind-boggling Obamanomics, via RCP, here’s TurboTax Tim helpfully informing Jeff Sessions that, yes indeed, Obama’s budget is unsustainable. Exit question: If Congress is now all about passing frameworks that force it to deal responsibly with spending, how about adding a Balanced Budget Amendment to the mix?


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Isn’t he a strong leader? ss//

NJ Red on February 17, 2011 at 4:16 PM

won’t happen, the left cannot swallow any reduction in entitlements, EVEN if it was coupled with increased tax revenues.

rob verdi on February 17, 2011 at 4:17 PM

What are the rules for contempt of congress, anyway? Dropping a useless spoof of a budget into congress as a lame attempt to perform the minimum legally required action would certainly qualify in an ordinary-English sense. How many hours were wasted reading it, when TurboTim frankly admits it was designed to be a non-starter?

cthulhu on February 17, 2011 at 4:24 PM

That Congress is looking for ways to force itself to take up these extremely important matters instead of just going ahead and taking them up tells you everything you need to know about American political leadership right now.

Ugh. You said it. They might as well hop in a bus, leave town, and then figure out ways to force themselves back to D.C. to trigger a vote on whether or not to have an adult conversation about someday dealing with the debt problem.

Weight of Glory on February 17, 2011 at 4:26 PM

Letting Congress cook up triggers for its own inaction is like letting your child think up his own punishment.

Chuck Schick on February 17, 2011 at 4:27 PM

More noise that will amount to nothing in the end…

davek70 on February 17, 2011 at 4:27 PM

Question: In the front page pic, where was Turbo Tim’s left hand?

d1carter on February 17, 2011 at 4:27 PM

More perfume on that pig.

portlandon on February 17, 2011 at 4:39 PM

If Congress is now all about passing frameworks that force it to deal responsibly with spending, how about adding a Balanced Budget Amendment to the mix?

How about congress growing up, doing their jobs, and cutting spending to match income. Every family in America does this.

Vashta.Nerada on February 17, 2011 at 4:39 PM

UGH. Grand Bargain = compromise with the left = the left gets 90% of what it wants = higher taxes for everyone.

angryed on February 17, 2011 at 4:39 PM

The Fair Tax is ready to be rolled out. It gets rid of so much that is wrong with the current tax code.

ny59giants on February 17, 2011 at 4:40 PM

Oh yeah, I totally am buying the Dems cooperation on this.
After all, look how reasonable they are being in Wisconsin in trying to save the state from insolvency with shared sacrifice.
Real patriots, they are.

jjshaka on February 17, 2011 at 4:41 PM

What the fine print will look like:

This trigger will set off a debate about wether or not to start a committee to study this particular aspect of the deficit, the resulting statement of which will be debated in no more than three committees and sub-committees before finally having a round of anonymous amendments added to it. Following all that, the various trigger statements will allocated into a single legislative package to go for a full vote, after several late night earmarking sessions.

I can feel the solvency already!!!!

abobo on February 17, 2011 at 4:41 PM

If a Dem is involved….it is no deal I want any part of. Now, if it is a Tea Party aligned idea that Dems want to join, OK….But if they have a hand in crafting…RUN AWAY!

search4truth on February 17, 2011 at 4:48 PM

Congress needs to stop kowtowing to those who receive the freebies (wrongly called “entitlements”) and representing those of us who actually work and pay for these “goodies” (welfare and Congress’ salaries).

LoneStarGal on February 17, 2011 at 4:48 PM

Another perk they can get rid of is the bottled water. You want water? BRING YOUR OWN!

GarandFan on February 17, 2011 at 4:51 PM

rob verdi on February 17, 2011 at 4:17 PM

agree

cmsinaz on February 17, 2011 at 4:51 PM

Letting Congress cook up triggers for its own inaction is like letting your child think up his own punishment.

Chuck Schick on February 17, 2011 at 4:27 PM

this

cmsinaz on February 17, 2011 at 4:52 PM

(Supposedly, more than 40 senators in all have “shown some interest.”)

Meaning that the uninterested Senators have a majority in the Senate. Pffffft!

The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates.

This has to go faster to succeed. Everybody knows that nothing will get done within 6 months of a Presidential (and Congressional) election, and even after the tax code is overhauled, it would take time to tackle Medicare and Medicaid to align their spending with the new tax code.

This is one more case of Congress trying to pass a “comprehensive” all-or-nothing hodgepodge that nobody really likes, that eventually breaks down. We’re better off attacking these problems piecemeal, gaining a consensus around smaller proposals that have wide support, and leave the most contentious issues for last, or for another Congress with a new President.

Steve Z on February 17, 2011 at 4:55 PM

smells like the usual Potomac two-step. too much time, too complicated and too many triggers that will never happen.

exceller on February 17, 2011 at 4:56 PM

Can, meet road. Road, this is can.

MJBrutus on February 17, 2011 at 5:01 PM

$180 billion over ten years?!?!?

$1.7 TRILLION in deficit THIS YEAR!!! /caps lock

That crappy $180 billion will not even pay the Gd interest for the $1.7 trillion we rack up just this year over that period, let alone the interest on the debt.

Grrrrrrrrrr!!!!!!

There is absolutely nothing to be happy or proud about with this news. All I can see is that these damn politicians need to be dragged out into the street, take the pens out of their hands and lock them out of the Capitol so they can’t write another single piece of legislation. Don’t let them pass another CR, just let the government close down and come to a grinding halt….jeez! I can’t believe not a single piece of crap got the message through their thick skulls this past November…

/steaming_pissed

Geministorm on February 17, 2011 at 5:05 PM

Remember, given a choice between boldly confronting the domestic challenge of our time and hiding under his desk to make next year’s campaign easier, The One’s preference couldn’t be clearer.

AP, this should be rephrased to the following:

Given the choice between putting out a detailed plan perfectly in line with the Debt Commission’s proposal ripe for Republicans and Democrats to demagogue (see Republicans’ abuse of the reasonable Medicare cuts in the ACA, and Democrats’ general proclivity to whine about any cuts in entitlements whatsoever), resulting in the effort fizzling out leaving the country with the status quo, or putting out a budget with modest cuts as a starting point for negotiations, then working behind the scenes to achieve a real outcome that reflects much of the debt commission’s recommendations, Obama’s preference couldn’t be clearer.

But of course, you’re not here to provide honest analysis and insight. You have to pander to your readers’ rabid desire to see anything Obama does as evil/incompetent/cowardly/tyrannical/dishonest/America-hating.

underceij on February 17, 2011 at 5:05 PM

Exit question: If Congress is now all about passing frameworks that force it to deal responsibly with spending, how about adding a Balanced Budget Amendment to the mix?

Answer – It was be just as impotent as this proposal. They have no intention of actually following the intent of such laws. Power corrupts – too many of them are more interested in staying in power.

connertown on February 17, 2011 at 5:12 PM

was” = “would”

connertown on February 17, 2011 at 5:13 PM

Letting Congress cook up triggers for its own inaction is like letting your child think up his own punishment.
Chuck Schick on February 17, 2011 at 4:27 PM

Even worse, I think you mean “potential punishment”.

connertown on February 17, 2011 at 5:16 PM

Is anyone else as nervous as I am that DURBIN is at the forefront of this???

I think that tells you all you need to know.

Indy82 on February 17, 2011 at 5:20 PM

This reminds of of Page 35 of the Red Primer.

Egfrow on February 17, 2011 at 5:32 PM

Agreed, Indy82 ~ Durbin’s involvement pretty much guarantees nothing worthwhile will come of the “effort” – which is probably just a smokescreen: they wish to appear to be talking about eventually getting serious about the real problems to avoid or divert public ire.

It makes no sense to place trust in the Senators who have screwed us at every opportunity in the past. One definition of insanity is doing the same thing over and over, always expecting a different result.

Adjoran on February 17, 2011 at 5:38 PM

Social Security and MEDICARE are NOT Entitlements.
They are VESTED Programs where those who PAID into these Programs with a “reasonable expectation of a RETURN on THEIR INVESTMENT” are hence VESTED.

Military Retirements are “Conditions of Employment/Service” the same as Senate, Congressional or Presidential Pensions.
Cut ONE, Cut them ALL!

How about them apples?

Just because Congress spent all of the Funds how about Congress doing without their Pensions? Or the President(s) that signed off on the irresponsible spending?

old trooper2 on February 17, 2011 at 5:42 PM

I’m really getting the feeling that dems, some republicans and those on entitlements are willing to sink the entire ship if they can’t get their way. Of course the dems will try to save the day by insisting on tax increases, but as we already know no matter what the tax rate is revenues will be around 19% of GDP. Stuck on stupid!

ReaganWasRight on February 17, 2011 at 5:45 PM

Every politician is pandering to the polls. The polls say that the majority of Americans don’t want cuts in Soc Sec, Medicare, Defense, and on and on. What we need are some pols with some guts to say, we need to cut ACROSS THE BOARD. Everyone’s ox gets gored.

BTW, I believe the pollsters should ask the public if it’s OK if everything gets a cut. I for one am amenable to the raising of my taxes AS LONG AS everyone shares in the pain. And it pains me to say go ahead & raise my taxes to deal with this – not because I have a problem with paying more (I do). I understand that sacrifices need to be made, but I don’t trust our govt to take the extra taxes to pay down the debt – they will likely squander it on more spending programs instead.

Congress is like the spender that gets a new credit card to transfer their balance to lower their rate and rather than paying off that debt, instead charges up that zero balance again, doubling their debt.

mdenis39 on February 17, 2011 at 7:25 PM

Social Security and MEDICARE are NOT Entitlements.
They are VESTED Programs where those who PAID into these Programs with a “reasonable expectation of a RETURN on THEIR INVESTMENT” are hence VESTED.

Military Retirements are “Conditions of Employment/Service” the same as Senate, Congressional or Presidential Pensions.
Cut ONE, Cut them ALL!

How about them apples?

I’m all for getting after federal employee pensions, too, but let’s make sure we are clear on how Soc Sec and Medicare work.

Soc Sec benefits are determined by a benefit formula, not by any calculation of a “reasonable return” on one’s investment. In fact, that’s pretty well impossible to provide at this point. Earlier generations got benefits that they didn’t fund; today’s workers are paying for today’s retirees; and the system is promising to tax the next generation of workers to smithereens to pay benefits promised to the baby boomers.

If every generation adopts the “I want what’s mine” mentality and interprets that as meaning the current benefit formula, there is only one possible end result of that thinking: massive tax burdens on your kids and mine.

Let’s not play the left’s game here and adopt a mindset that can only lead to much larger government.

The same is true for Medicare, except more so.

Chuckles3 on February 17, 2011 at 7:50 PM

2 years to rewrite the tax codes? Might as well tell the truth and say “2 years of kicking the can down the road”…

Gohawgs on February 17, 2011 at 10:07 PM

The standard rule of thumb in Washington is, a tax is always a tax and never goes away, it may be redirected, reduced, increased or even renamed BYT it will still be there and will still be a tax.

The only difference between death and taxes is that death doesn’t get worse every time Congress meets.
Will Rogers

old war horse on February 17, 2011 at 11:39 PM

All ‘entitlements’ are paid upon the sufferance of Congress.

Congress can get rid of them as easily as pay out on them. Nothing prohibits the sovereign power in that realm.

As it is they appear to want a scaffolding, not a framework.

And they keep on getting more rope.

I can do the math on that.

ajacksonian on February 18, 2011 at 6:57 AM