Democrats want more revenue so that the entitlement system doesn’t have to be reformed, while Republicans want to reform the entitlement system so that the government doesn’t have to take up more of the economy. This means that doing a good deal of each at the same time would not give both parties what they want—it would give both parties what they are trying to avoid.
A grand bargain with far higher taxes in return for a thoroughly transformed entitlement system would give each party the means it is after but at the cost of the end it is after. That would be a foolish bargain for both of them. They would rather do nothing, and so in fact they have done nearly nothing—reaching agreements to put off deadlines and avert self-inflicted pain but otherwise not changing the basic fiscal circumstances much. These tiny steps are worth taking, but they do not address the underlying problem. Since our deficits and debt grow larger in the meantime, there will always need to be another deadline set, and another crisis scheduled, but it is hard to see why those should turn out much differently, at least as long as either party has the electoral power to stop the other.
At some point, in other words, the fiscal question dividing the parties will be decided by voters. It will likely not happen in some dramatic fashion with one decisive election fought over the future of America, but in the normal and gradual course of our politics. It may even happen by accident—after an election fought mostly on other issues that gives one party or another enough control of the elected branches to advance its fiscal reforms. Until then, both parties will likely continue their defensive efforts, and seek whatever modest incremental steps are possible in an era of divided government.