What It Takes to Get a Deal
“I’ve got all the time you need,” groused one senior Congressional aide intimately involved in tax policy when I dropped by his office Monday morning.
Translation: the nation is close to the fiscal cliff. But there’s no deal. There’s not even anything close to a deal. There’s not even anything to work on.
Yet.
And so this aide, like many other key Congressional staffers, bide their time. They’re like Bruce Wayne, whiling away the hours in stately Wayne Manner. Batman’s alter ego waits for the Bat-Phone to chirp with a call from Commissioner Gordon. He’ll then dash to the Bat-Poles to save Gotham City from the Joker, the Riddler or whatever arch-criminal escaped from Arkham Asylum. Like Wayne, these aides wait for orders from on high to cobble together legislation to hopefully avert an economic catastrophe. This is the so-called fiscal cliff, where the government simultaneously hikes tax rates and slashes spending in January.
But the Bat-Phone has yet to ring.
It had better ring soon. Because Gotham City is running out of time.
There’s general consensus that things really have to start rolling by Wednesday or Thursday if President Obama and House Speaker John Boehner (R-OH) are to carve a deal before Christmas. Sunday’s one-on-one meeting between the president and Boehner is viewed as positive. The same goes for the telephone chat Mr. Obama had Monday with Senate Majority Leader Harry Reid (D-NV). It speaks volumes that the sides are playing their cards so close to the vest that virtually no details of the meetings leaked. In fact on Sunday, Josh Earnest and Mike Steel, respective spokesmen for the White House and the speaker, emailed reporters precisely the same statement: “This afternoon, the President and Speaker Boehner met at the White House to discuss efforts to resolve the fiscal cliff. We’re not reading out details of the conversation, but the lines of communication remain open.”
The lines are open. But the Bat-Phone isn’t ringing. That’s because the devil is in the details. And we are far away from the details.
Let’s hypothetically say President Obama and Boehner reach a general accord by mid-week. It probably takes several days to write the actual piece of legislation. One thing that could expedite assembly of the bill is that, in many respects, parts are already written. In fact, there’s a menu of items which already have pre-crunched numbers on a variety of tax, spending and entitlement reform proposals from three primary sources. First, there are ideas concocted by former Senate Budget Committee Chairman Pete Domenici (R-NM) and former Clinton Budget Director Alice Rivlin who co-chaired the Debt Reduction Task Force. Then there are outlines from The National Commission on Fiscal Responsibility and Reform, led by former White House Chief of Staff Erskine Bowles and Senate Minority Whip Alan Simpson (R-WY). Finally, there’s a slate of designs cooked up by last year’s supercommittee. That’s the group of bipartisan and bicameral lawmakers who tried to solve some of the nation’s fiscal woes in exchange for raising the debt ceiling. The supercommittee ultimately failed.
So lawmakers may very well take a “cafeteria” approach to constructing this package. Kind of like selecting fruit salad, roast beef and chocolate pudding as you go down the lunch line with your tray. In this case, lawmakers could take one entitlement reform option from Domenici/Rivlin, one tax policy blueprint from Bowles/Simpson and one ala carte item on spending reduction from the supercommittee. There are dozens of options available which could make melding a final bill a little easier.
But lawmakers are probably going to demand that the Congressional Budget Office (CBO) “score” the final proposal. That means running the numbers past non-partisan CBO actuaries and economists to determine the exact price tag. That could add some time.
So this means it’s a challenge to synthesize an actual piece of legislation before early next week.
Then comes the whipping.
Those who have seen the movie “Lincoln” should understand whipping a vote. In fact, the entire movie is little more than a ferocious whip effort to pass the 13th Amendment through the House of Representative to abolish slavery. President Obama and senior Congressional leaders in both bodies face a monumental task to whip this vote to cajole reluctant lawmakers to vote yes. This will take days as the president and Boehner must engage in hard-selling. Furthermore, recalcitrant lawmakers who won’t commit to anything until they actually see the bill or the CBO score could complicate this process.
Then there are a host of issues not directly linked to the fiscal cliff which could further exacerbate any potential budget pact.
First there are “tax extenders.” This is an annual bill of focused tax breaks for business interests which Congress generally okays to renew tax policies which would otherwise expire. Secondly, there is sure to be a fight over unemployment insurance (UI). The sides usually war with each other about the length of unemployment benefits – although arguing for fewer weeks of assistance isn’t the best political optic at the holidays. Third, there’s the $60.4 billion supplemental spending request the administration announced Friday to cover Hurricane Sandy. One Appropriations Committee source expects the total figure to decline somewhat in an effort to garner support. That’s certain to inflame the New Jersey and New York delegations who could go to the mat. Plus, the $60.4 billion is new spending. A figure of more than $60 billion immediately diminishes the impact of any fiscal cliff deal. Lawmakers could enroll the supplemental spending request into a final fiscal cliff measure. Fourth, there’s a farm bill which languished in the House since summer due to disagreements over cuts to food stamps.
Because the fiscal cliff package would carry significant tax consequences, Article I, Section 7 of the Constitution dictates this bill must originate in the House.
This poses another set of problems.
The House Republican Conference has what’s often referred to as a “72 hour rule.” When Republicans seized the House after the 2010 midterm elections, many lawmakers complained Democrats never allotted enough time to “read the bill.” So House Republicans require that bills must lay over for parts of three days so members understand the measure before a vote is called. You can bet dollars to doughnuts that lawmakers of all stripes are going to want to comprehend every jot and tittle of this bill.
But even though people colloquially refer to the decree as the “72 hour rule,” it’s anything but. It’s really a “24 hour and two seconds rule.” If the House posts a bill online at 11:59:59 pm on a Sunday, it could conceivably begin debate at 12:00:01 am on a Tuesday. The key here is that the measure be available for parts of three days.
So that easily gets this to late next week, perhaps December 20-21 – if things start to move mid-week here.
But then there’s the Senate.
Surprisingly, the Senate could dash through this package with dispatch if it really wants to. Reid and Senate Minority Leader Mitch McConnell (R-KY) could easily okay something by unanimous consent and with minimal debate if they can get clearance from senators on both sides of the aisle.
But that’s the problem.
If the unemployment insurance or hurricane assistance or entitlement portions aren’t right, expect to get an earful from Sens. Bernie Sanders (I-VT), Chuck Schumer (D-NY) and Mary Landrieu (D-LA).
If the spending cuts aren’t right, Sens. Rand Paul (R-KY), Jim DeMint (R-SC) and Mike Lee (R-UT) could jam up the floor. They could hold out to require the Senate to break two filibusters. That means the Senate would have to get 60 votes just to get onto the fiscal cliff bill itself and cross the 60 vote threshold a second time to wrap up debate on the measure. If any senator makes the Senate take all of the allotted time, that could consume three to five days alone. This scenario easily entails the Senate coming into session the week after Christmas.
And all of this is if things start to come together in the next few days.
Here is what it takes to get a deal:
1) The calendar needs to advance. Despite the above scenarios, it’s still a little early. Boehner can’t appear too anxious to deal when he has an agitated conference, fretting he’ll agree to something they don’t want on taxes or spending. Congress seemingly does its best work when it is down the very final ticks of the clock. We’re days away from that. And there’s always a way to write a short-term extension that kicks the issues to January or beyond.
2) Perhaps the biggest impetus to spur an agreement could be a panicked stock market. The Dow Jones Industrial Average is up nearly 700 points over the past three weeks. It hasn’t reacted to the lack of a deal – just yet. The sounding of klaxons on Wall Street or in the bond market could force an agreement.
Recall what happened in September, 2008. The economy stood on the precipice of collapse. Lawmakers and the Bush Administration hastily wrote a $700 billion bailout package known as the Troubled Asset Relief Program (TARP). At first, the measure melted down in the House. The Dow sunk 777 points in synchronicity with the failed vote. It remains the single-largest point drop in Wall Street history. A few days later, the Senate overwhelmingly approved the measure and the House followed suit.
3) Finally, a credit downgrade could rattle lawmakers. Remember that Standard & Poor’s downgraded the credit worthiness of the U.S. after the debt ceiling debacle of August, 2011. Moody’s and Fitch threatened possible downgrades if the U.S. didn’t improve its fiscal situation. The credit agencies are banking on real reforms – and they haven’t seen much yet.
But there’s no deal. For now, the Bat-Phone remains silent. The Bat-Signal atop police headquarters is dormant. The Batmobile is parked in the Batcave. Congressional aides and lawmakers await their summons to swing into action.
If the call even comes at all.
