Digging in for a bruising struggle, Republicans on Congress’ powerful deficit-fighting “supercommittee” targeted Social Security and government health care spending Tuesday while Democrats pressed for higher tax revenue as part of any deal to reduce red ink by at least $1.2 trillion over the next decade.
There were no ultimatums from either side, and there was even a fleeting suggestion that tax reform might eventually clear the way for the bipartisan agreement that both sides say they want.
Yet with the Census Bureau reporting national poverty at a 28-year high and partisan struggles flaring elsewhere in Congress, the events underscored the challenge the 12-member panel faces as it gropes for a deal that can clear Congress and win President Barack Obama‘s signature by year’s end.
With the nation’s debt high and surging and the population aging, “Citizens will either have to pay more for their government, accept less in government services and benefits, or both,” Doug Elmendorf, the head of the nonpartisan Congressional Budget Office, told supercommittee.
Though the choices are difficult, he said, the problem “need not be viewed as unsolvable.”
Yet the challenge is complicated, he said, if the lawmakers’ are hoping to revive the economy in the short term and to cut federal deficits in later years. In that case, “a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade.”
The committee has until Nov. 23 to recommend legislation, but Elmendorf said the essential decisions must be made as much as three weeks earlier than that to make sure they are drafted into a bill and their impact on the federal budget calculated carefully.
The panel was created last month as part of a compromise that avoided a threatened government default and cut nearly $1 trillion from some federal programs.
In addition to the original goal of cutting long-term deficits, Democrats want much or all of Obama’s week-old $447 billion jobs proposal put on the agenda, significantly increasing the amount of savings that must be found.
“My question to Congress is: What on earth are we waiting for?” the president asked rhetorically as he visited Columbus, Ohio, to campaign for the enactment of his program of Social Security payroll tax cuts and spending increases for highway projects and other domestic programs.
Speaking in the home state of Republican House Speaker John Boehner, the Democratic president said his call for $25 million for school construction would put thousands of construction workers in Ohio back to work.
Boehner responded from the Capitol, where he said the president was seeking “permanent tax increases put into effect in order to pay for temporary spending. I just don’t think that’s going to help our economy the way it could.”
Republicans are likely to accept some or all of the tax cuts Obama wants, but the spending increases shape up as a tougher sell. GOP leaders point out that the administration’s call for higher taxes on the wealthy has faced opposition from some Democrats as well as Republicans in the past.
There were other skirmishes in Congress as the two parties sought to protect their own priorities in an era of soaring budget deficits.
Democrats on the Senate Appropriations Committee launched defense spending legislation for the budget year beginning Oct. 1 that is $17 billion smaller than the amount approved by the House, a difference that must be reconciled by the end of the month to keep the money flowing.
Also in the Senate, Democrats maneuvered to put Republicans on the spot on disaster aid by seeking legislation that would add $6.9 billion to FEMA’s accounts without offsetting cuts elsewhere. The effect would be to let deficits rise.
Past efforts to reach compromise on major debt-reducing proposals have run aground over mutually exclusive demands — Republicans opposed to raising taxes and Democrats against cutting benefit programs.
But Obama has made clear he is willing to consider spending cuts this time around, and Boehner has said he put additional revenues on the table in negotiations with the president last summer that ultimately collapsed.
At the time the two men were considering tax reform that would generate growth — and about $800 billion in additional tax revenue over a decade — while lowering rates and closing loopholes.
Sen. Max Baucus, D-Mont., briefly raised the issue of tax reform at Tuesday’s supercommittee hearing, asking Elmendorf if “revenue equal” overhaul of the existing code would help the economy grow.
The CBO director said it was possible, adding he couldn’t say how big the impact might be.
Also inside the debt-reduction hearing, Rep. Jim Clyburn informed other lawmakers of a new Census Bureau report that showed 46 million Americans living in poverty. Referring to health care and other domestic programs, he cautioned Republicans, “‘We really ought to look into all of these programs to see where cuts are to be made rather than talk about the number.”
Much of the morning-long hearing consisted of committee members posing questions to Elmendorf designed to elicit answers that might enhance their own bargaining positions for negotiations with lawmakers of the other party.
Rep. Jeb Hensarling, R-Texas, a co-chairman of the panel, pointed to statistics showing that Social Security, Medicare and Medicaid are growing faster in relation to the overall economy than they have in the past. “Not quite double, but certainly that can be described as explosive growth, could it not?” he asked.
“Very rapid, Congressman, yes,” Elmendorf replied.
Hensarling also quoted Obama as saying, “The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. Nothing comes close.”
Asked if he agreed, Elmendorf said he did.
Sen. Jon Kyl, R-Arizona, asked Elmendorf if he agreed that inappropriate payments in federal programs account for a significant amount of spending.
“I do agree,” the CBO director said, although he quickly added that there was a difference between fraud and improper payments, some of which might be the result of individuals who were mistaken in how they filled out forms.
Among Democrats, Sen. John Kerry got Elmendorf’s agreement when he said federal revenues have been relatively high as a proportion of the overall economy in years since World War II in which the budget was balanced — an attempt to counter Republican arguments that taxes are already too high.
Rep. Chris Van Hollen, D-Md., asked Elmendorf if it were true that Congress could adjourn for the next 10 years and the deficit savings would be greater than recommended by other groups that have tried to produce sweeping reduction packages. Elmendorf said that was correct — the income tax cuts enacted while George W. Bush was president would expire — and Van Hollen said quickly he wasn’t advocating that.
But, he said, “It’s time for this committee to get real and recognize that, yes, there are spending issues, but there’s also a revenue issue. … We’ve got to have a balanced approach.”