President Barack Obama showed some chutzpah when he personally issued a rare, bona fide veto threat to the deficit supercommittee, and here’s a key reason why: Failure is an option.
This time there is no threat of a debt default, no possibility of a government shutdown.
Obama avoided hard-and-fast positions early in the past two budget battles because the stakes were just too high. But through the quirks of the law that created the supercommittee, Obama can afford a stalemate on this round.
The White House and Congress will get another year to agree to the $1.2 trillion in budget cuts if the joint House-Senate committee deadlocks in November. But on the off-chance that a bill reaches Obama’s desk, vetoing a measure without tax hikes can win the affection of his base and more than a few independents who buy his soak-the-rich plan — all without the messy problem of sparking a worldwide recession.
It’s as close to a sure thing as there is in politics.
“There is no gun at the head of decision makers,” said Robert Reischauer, a former director of the Congressional Budget Office and president of the Urban Institute. “What we had before was a situation in which the government would shut down and services would grind to a halt or the world economy would be put at risk, so this is very different. This is a debate over a means to an end, although the end is not in doubt.”
The president and House Speaker John Boehner (R-Ohio) couldn’t agree on much during the debt ceiling talks and the spring budget negotiations, but they each harbored a self-interest to avert the worst-case scenario. That element of mutually assured destruction — an insurance policy that kept both leaders from going to the brink — is far less apparent in the latest budget go-round.
That doesn’t mean Obama and Boehner are rooting for failure. Quite the opposite.
People close to Boehner insist the speaker wants the process to succeed. Legislative leaders stand to suffer more than the president if the supercommittee falters because it is a creature of Congress, an institution already viewed by voters as politically broken.
Obama and his top aides, still wistful about how close they came to a “grand bargain” with Boehner in July, would much prefer that Congress go big and craft a $4 trillion deficit-cutting package. A supercommittee deadlock could rattle the stock market or prompt another downgrade of the U.S. credit rating — perilous outcomes for the White House.
But the fears are nowhere near as palpable as they were during the debt-limit debate or the down-to-the-wire negotiations in April to keep the government running.
Administration aides acknowledge the comparatively lower stakes, saying they are no longer in a position of “legislative compromise by necessity.”
“We hope that the committee and the Congress follow the proposals that the president put forward for far greater deficit and debt reduction,” White House press secretary Jay Carney said at a briefing. “But whatever the outcome is, even if it results in — which we definitely do not support — but even if it results in a failure to act by Congress and the [trigger] kicking in, that is certainly not as severe as defaulting, which is what we faced this summer.”
Given how the committee has proceeded so far, the odds that it will reach a bipartisan deal appear as long as they have been since Congress created it last month.
First, Boehner ruled out consideration of any new revenues, a baseline requirement for Democrats. Then, Obama warned Congress that he would veto any bill that failed to raise taxes on the wealthy but cut benefits for Medicare recipients.
And in the last week, Congress once again showed its inability to accomplish even the most routine tasks, risking a federal government shutdown because the House and Senate couldn’t agree on a measure to fund the government for 49 days.
“There is probably a five percent or less chance” of the supercommittee succeeding, said Stan Collender, a former House and Senate budget committee staff member.
There is so little confidence in the supercommittee that administration officials, lawmakers and budget experts point to a likely alternate outcome: The committee deadlocks, but since the trigger on the $1.2 trillion in automatic, across-the-board cuts wouldn’t be pulled until 2013, Congress and the White House would take that extra year to draw up a plan. The expiration of the Bush-era tax cuts at the end of 2012 would serve as an additional cudgel.
“Then, there is one hell of a lame duck session here after the election in November,” Sen. Joseph Lieberman (I-Conn.) said Monday from the Capitol, adding that “a lot of people around here” are floating that scenario. “That’s not the way to run a government.”
In what could be a goodwill gesture by Republicans, the panel discussed tax reform during its meeting Monday. Democrats insisted on discussing revenues before cuts, since the GOP bolted from the talks led by Vice President Joe Biden after the group identified more than $1 trillion in reductions but before Democrats could nail them down on taxes.
When Congress created the supercommittee in August, lawmakers bought into the concept as a unique solution for a unique time — a bipartisan panel forced to recommend at least $1.2 trillion in cuts or risk taking a meat ax to Republican and Democratic priorities.
But with the pressure of default averted, the doubts on Capitol Hill have intensified.
Lawmakers wonder how a group of six Democrats and six Republicans won’t deadlock, considering Washington’s culture of polarization and deep ideological divides.
At least one lawmaker would need to break party ranks, which seems highly unlikely, given the control that the congressional leaders are wielding and the fast-track consideration the measure would receive in Congress. The only other option is that the panel shocks everybody and crafts a true compromise that wins broad bipartisan support.
“It’s hard to have an even committee,” said Texas Rep. John Carter, a member of the Republican leadership. “Especially since leadership has taken a position. It’s a tough fight, a tough situation.”
The committee is struggling with intraparty differences, as well. House Republicans are far more averse to new taxes than Senate Republicans. And Senate Democrats have been more willing than their liberal counterparts in the House to consider cuts to Medicare and Medicaid.
Some Democrats, in fact, prefer a supercommittee deadlock to an agreement, because their cherished entitlement programs would take a lighter hit if the trigger kicked in ($150 billion) than under Obama’s plan ($348 billion).
Even for defense hawks, there’s an upside to gridlock. They could use the extra year to make the case for shielding the defense budget all together, which could lose as much as $600 billion if the trigger goes into effect. Under that scenario, the politics of defending sharp Pentagon cuts would be difficult.
Carter has been quizzing his colleagues on what an across-the-the-board cut — known as sequestration — could mean for the 50,000 soldiers in his district, which includes Fort Hood. He suggested that as the clock ticks to 2013, when the trigger hits, Congress could “start working toward trying to get some agreement on fixes with everybody.”
“People tell me there’s never been a sequestration that’s lasted very long,” Carter said.
When asked about the prospects of retooling the trigger, Rep. Scott Garrett (R-N.J.), a leading House conservative and Budget Committee fiscal hawk, said, “Retool? Just eliminate it.”
Garrett, like the White House, understands that the one-year grace period offers a safety net.
“We’ll have more than enough time for those people to undo them,” Garrett said, referring to lawmakers anxious about defense cuts.
So the trigger designed to scare both parties may ultimately alarm neither, at least in the near future.
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