CARL LEUBSDORF: Capitol Hill braces for another fiscal showdown

By Carl Leubsdorf

Facing another fiscal showdown, it’s business as usual on Capitol Hill. House Republicans are threatening to renew the tactics that nearly precipitated an economic disaster last summer by withholding support from extending the federal debt limit without severe budget cuts.
At the same time, many of them are trying to rescind some of the planned defense cuts that resulted from last year’s failed effort to deal with the problem.
Senate Democrats are seeking leverage with a similar tactic, vowing to let all of the Bush cuts expire at year’s end if the Republicans don’t agree to exempt the cuts for upper-income Americans.
Meanwhile, neither party is showing much interest in the latest bipartisan effort. “The Campaign to fix the Debt” was launched by a group of prominent former Democratic and Republican officeholders and corporate CEOs, headed by the co-chairs of the panel that proposed the best known recent debt control package, former GOP Sen. Alan Simpson and former White House chief of staff Erskine Bowles.
It includes Republicans willing to consider revenue increases, like former Sen. Judd Gregg of New Hampshire, and Democrats pushing entitlement cuts, like former Budget Director Alice Rivlin.
No one expects anything to happen before Congress holds its post-election “lame duck” session, facing a Dec. 31 deadline for the scheduled expiration of the 2001 and 2003 Bush tax cuts and the need for yet another increase in the legal debt limit.
The ultimate prescription still should be something akin to the “grand compromise” that President Barack Obama floated last year in his secret talks with House Speaker John Boehner.
In fact, there are repeated reports of quiet talks among some of the remaining congressional centrists on how package proposals could be constructed.
After all, everyone knows:
• A relatively painless way to improve Social Security’s long-term solvency is to raise the retirement age gradually and change the way annual cost of living adjustments are calculated.
• Medicare’s long-term viability can be improved by making higher income recipients pay some medical costs that the program now pays in full and curbing costs in the overall health system.
• A revision of the income tax laws to limit or eliminate some preferences and modify the rate structure would produce extra revenue in a more politically acceptable way.
• These steps would ease the pressure on the 15 percent of the budget that funds discretionary domestic programs. But a basic problem remains that most congressional Republicans don’t want the revenue increases and defense cuts that Democrats demand in return for backing entitlement cuts.
So the Simpson-Bowles folks have it right.
After all, no one really wants to repeat last year’s experience, when cliffhanger politics unsettled world finances and produced an inadequate solution that lawmakers are now trying to change. But though the solutions are out there, it’s easy to see that happening again – this time on New Year’s Eve.
Carl P. Leubsdorf is the former Washington bureau chief of the Dallas Morning News. Readers may write to him via email at: carl.p.leubsdorf@gmail.com.