Big Deficit Deal?
In the post just below, TDS Co-Editor William Galston alludes to reports of "serious bipartisan talks underway in the Senate to follow up on recommendations of the president's fiscal commission." This has indeed been a source of major buzz over the last few days, particularly when the Wall Street Journal's Jonathan Weismann broke the story and erroneously reported a revenue target for the group that indicated Democrats weren't getting any significant tax increases in exchange for cuts in Social Security and Medicare benefits (always the implicit tradeoff at the heart of hopes for a bipartian deficit deal).
Seems there is always a "gang" that emerges in the Senate to explore bipartisan deals, and this one naturally involves the four senators who sat on the deficit commission and actually supported its report: Democrats Dick Durban and Kent Conrad, and Republicans Tom Coburn and Mike Crapo. They've apparently brought Democrat Mark Warner and Republican Saxbe Chambliss into their cabal, creating a credible-sounding "Gang of Six." Ezra Klein provides a chart of what the commission recommended, which has a much higher revenue figure than the original "Gang" reports, and which also assumed the Bush tax cuts for high earners would be allowed to expire.
It's anybody's guess whether Durban, Conrad and Warner can actually get a significant number of Senate Democrats to support what looks like a complex automatic mechanism for producing domestic spending cuts (including Social Security and Medicare), and whether the GOPers in the Gang can actually get Republicans to back off on the Bush tax cuts and contemplate "tax reforms" that raise total net revenues. It's also unclear whether the White House and House Republicans, who are engaged currently in a game of chicken over FY 2011 appropriations, are in any way bought into this process.
But as a point of historical fact, as Jonathan Bernstein has pointed out, past Big Deficit Deals were only executed when financial markets very explicitly demanded it, which isn't happening right now:
The last two major deficit reduction packages -- the bipartisan one during the George H.W. Bush administration, and the partisan one passed by the Democrats in 1993 -- were both driven by that kind of "explicit outside pressure." There's simply no reason to believe that Republicans would agree to significant increased revenues under current circumstances, and no reason to believe that Democrats would slash spending enough to make a serious dent in medium-term deficits without a Republican buy-in on taxes.
Since the House Republicans who are hankering for a government shutdown over appropriations are also extremely unlikely to support even a nickel of new revenues, the Gang is definitely fighting an uphill battle, even if it reaches internal agreement in its Capitol hideout.