The Fiscal Cliff & Zero Dark Thirty
“We are spending billions of dollars.”
“I want targets.”
“We are still no closer to defeating our enemy.”
Those lines may sound familiar if you’ve seen the trailer for “Zero Dark Thirty,” the upcoming film about the hunt for Osama bin Laden.
But those lines could ring just as true around the Capitol this weekend as Congressional aides and lawmakers are engaged – not in “the greatest manhunt in history” – but perhaps the greatest hunt to forge a legislative deal in a very long time.
This pursuit is not unlike the search for bin Laden. Their goal is just as elusive. It’s stretched out for years as lawmakers scoured political caves on multiple continents, pursued budgetary leads, empanelled teams of fiscal commandos named Bowles-Simpson, Domenici-Rivlin and an elite squadron known as the “supercommittee” in an effort to hunt their fugitive – a final deal to alter the nation’s financial trajectory.
They’re spending trillions of dollars. They want spending reduction targets. And they are still no closer to defeating their enemy. That’s burgeoning entitlement spending on Social Security, Medicare and Medicaid – the chief drivers of the U.S. debt.
It’s Zero Dark Thirty at the Capitol this weekend as policymakers launch this intensive effort to avoid hurtling off the fiscal cliff.
But the reality is that the best President Obama and Congressional leaders may hope for is a few drone strikes that neutralize a budgetary terror cell somewhere.
The fiscal cliff is comprised of two primary components. The first part is made up of the so-called Bush era tax cuts. If Congress doesn’t act by January 1, all Americans could see their taxes explode. The sides have traded various proposals about renewing tax breaks for those making anywhere from $1 million annually to those pulling in $200,000 a year. The latter is the president’s stated preference.
The second part of the fiscal cliff is more complicated.
Congress passed the Budget Control Act (BCA) in August, 2011. That law increased the debt ceiling and imposed spending caps of $1.047 trillion for the rest of fiscal year 2012. It also birthed the supercommittee, which was charged with finding at least $1.2 trillion in spending cuts over the next decade. If not, a “sequester” would kick in on January 2, 2013. A sequester is a massive set of arbitrary, automatic spending reductions. The idea was that the threat of the sequester was so noxious that the supercommittee would have to reach an accord. It didn’t. And so President Obama is set to order the nation’s first sequester on Wednesday.
During Friday’s huddle at the White House with Mr. Obama and top Congressional leaders, a source familiar with the session said that House Speaker John Boehner (R-OH) declared he wouldn’t move to extinguish the sequester without a matching set of spending cuts to take its place. In his remarks after the meeting, the president did not mention the sequester at all.
Wrestling with the tax cuts is easy compared to excavating spending reductions. That’s what’s stymied lawmakers and administrations since entitlement spending started to explode the U.S. debt in the 1980s. So it’s important to review how the government got here. Since the mid-1980s, policymakers have deployed a litany of legislative armaments to bridle this behemoth – with only mixed success.
In 1985, there was Gramm-Rudman-Hollings, a plan authored by then-Sens. Phil Gramm (R-TX), Warren Rudman (R-NH) and Fritz Hollings (D-SC). It set a number of spending caps over the succeeding years, with the threat of a sequester if Congress missed the targets. The Budget Enforcement Act (BEA). of 1990 scrapped Gramm-Rudman-Hollings and initiated new spending targets. A short government shutdown in October, 1990 helped trigger the BEA. President George H.W. Bush also rescinded his famous “no new taxes” pledge from the 1988 campaign. That created a potential schism with then-House Minority Whip Newt Gingrich (R-GA). By 1995, Gingrich was Speaker of the House and faced off with President Bill Clinton during a trio of legendary government shutdowns. But the showdowns fostered the Balanced Budget Act of 1997. This pact aimed to balance the federal books by 2002. It also helped produce several consecutive balanced budgets as the government ran surpluses.
Until September 11, 2001.
After that, Congress and President George W. Bush approved multiple, supplemental spending bills to fight the war on terror and wage campaigns in Afghanistan and Iraq. Entitlement spending was already skyrocketing as Baby Boomers hit retirement age. Health care costs for retirees and the infirm simultaneously vaulted.
Since then, no one’s done much to harness the spending problem.
In other words, it’s nearly impossible for lawmakers to engineer a solution between now and January 2nd to snuff out the sequester. If the parties couldn’t arrest federal spending over the past 30 years, how can they it between now and the start of the 113th Congress on January 3rd?
Any fiscal cliff compact will likely stick to the tax cuts and perhaps an agreement against widening the Alternative Minimum Tax (AMT) and a reauthorization of unemployment insurance (UI) for those out of work.
This is the Billy Bean approach to legislation. No swinging for the fences. A lot of bunting and moving the runners over. But it’s doubtful this tactic will win the game.
“We should not do small ball,” protested Senate Budget Committee Chairman Kent Conrad (D-ND). “We should do the grand bargain because that’s what the country needs.”
It all worries Sen. Rob. Portman (R-OH).
“If we make it through this cliff we’re going to hit another one right away,” said Portman. “Our debt is unsustainable at current levels. That has to be dealt with.”
This is the problem that continues to vex lawmakers. Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) were both upbeat after they returned from the White House late Friday.
“Whatever we come up with is going to be imperfect. Some people aren’t going to like it. Some people will like it less,” said Reid.
“We’ll be working hard to see if we can get there in the next 24 hours,” said McConnell.
But even if they can “get there” in the Senate, that leaves the House of Representatives.
The Republican-controlled House is most-vigilant about slashing spending. The Budget Control Act of last year did ax some spending and imposed the sequester. Some now believe the sequester may be the only way to implement significant spending cuts since all other methods appear to have failed. House Republicans rode to power in 2010 with an order to reduce spending. But the modest successes haven’t been what rock-ribbed conservatives demand. This is why a measure that just focuses on averting one-half of the fiscal cliff could face trouble in the House.
All one needs to do is study the dramatic turn of events in the House right before Christmas. The House barely approved a spending reduction measure that would replace the sequester for a year. The vote was 215-209. A switch of three votes produces a tie – which means the measure fails. Moment later, Boehner had to yank a bill to extend the tax cuts for those earning less than $1 million off the floor because he didn’t have the votes.
In this case, past may be prologue. With the only difference being the calendar.
“It’s the beauty of deadlines. Deadlines help produce results. The pressure is almost red hot,” said Senate Finance Committee Chairman Max Baucus (D-MT). “It started with the president and the speaker and it’s going to have to end there.”
And yet at Friday’s meeting, Mr. Obama green lighted Reid to try to craft an agreement with McConnell first.
This could be called the “Life Cereal” approach to legislating.
Back in the 1970s, Quaker Oats ran a series of iconic television commercials of finicky children refusing to try a new cereal.
“I’m not going to try it,” the kids protest as they shove the cereal bowl around the breakfast table like an air hockey puck.
Suddenly, the most fussy eater of all, “Mikey,” digs in and chows down on the new grub.
“He likes it! He likes it!” the others exclaim, now willing to devour the previously untested cereal.
The thought is that if the Senate can stomach the cereal first, perhaps the House can follow suit. But finding the votes in the House on big items has been an enterprise of the first order over the past two years. One wonders why it would be any different now.
So it’s Zero Dark Thirty at the Capitol. The mission has the green light. The fiscal paratroopers are acquiring targets and looking for anti-aircraft and sniper fire. But the detachment is already pinned down by the scope of this operation.
And while they may succeed in sidestepping part of the fiscal cliff, it will be hard to declare mission accomplished.
