Party intransigence dims hopes for 'grand bargain'

WASHINGTON (AP) ? The bipartisan cease-fire that kept the government running this spring gave birth to hopeful talk ? among pundits and some senators, at least ? of a much larger "grand bargain" that would reduce the federal deficit for years.

Such optimism, however, seems to ignore how far apart the two parties remain on key issues, and how adamantly they defend positions that prohibit compromise.

The mutual obstinance disappoints those who felt top Republicans and Democrats were close to a major accord on spending cuts and tax increases in December.

When that potential deal evaporated, President Barack Obama settled for $620 billion in new tax revenue over 10 years, as part of the "fiscal cliff" resolution on Jan. 1. That's about half the total revenue he has sought as part of a proposed grand bargain in which Democrats would agree to slow the growth of social programs they hold dear

Congress then enacted $85 billion in spending cuts this year, the "sequester" deal once considered unacceptable to both parties. Some Democrats had hoped to extract new tax revenues as part of a compromise to mitigate those across-the-board program cuts.

Now, despite widespread grumbling about the sequester cuts and the still-growing deficit, both parties seem more inclined to stand pat than to make the types of compromises that might begin to shrink the nation's debt, $16.8 trillion and growing.

For Republicans, that means blocking any further income tax increases on the wealthy, even though Obama campaigned on that issue last year. Democrats in turn refuse to consider slowing the growth of popular and costly "entitlement" programs, including Social Security and Medicare.

"The chief impediment to reaching a grand bargain has been the refusal of Republicans to ask the wealthiest and well-connected to pay even a dime more to help us deal with our deficit challenges," White House spokesman Josh Earnest said recently. Some GOP lawmakers, he said, "are actually running around the country bragging about their intransigence on this."

Republicans say Obama is fixated on raising taxes.

Americans tell pollsters the debt is a serious problem, but they're disinclined to make sacrifices to reduce it. When Pew Research asked in March which was more important, reducing the national debt or keeping Social Security and Medicare benefits as they are now, the public sided with safeguarding the benefits programs, 53 percent to 36 percent.

Congressional GOP leaders repeatedly have said the $620 billion in new revenues demanded by Obama during the fiscal cliff action ? which Republicans were powerless to block ? is all he will get. That revenue comes largely from increasing tax rates on couples' incomes above $450,000, a more lenient threshold than the $250,000 target Obama campaigned for.

Some lawmakers say Republicans might allow overall revenue to rise through another means: trimming enough tax credits and loopholes to generate more net government income.

The alternative is a "revenue-neutral" change to tax laws. It would shift tax burdens among various payers but generate the same grand total for federal programs.

Kevin Smith, a spokesman for House Speaker John Boehner, noted that the House Republican budget "called for revenue-neutral tax reform."

It's possible, of course, that both sides are posturing and compromise is attainable. A few columnists and lawmakers suggest Republicans might accept $250 billion to $400 billion in new revenues over 10 years ? via tax code changes, not income tax rate increases ? in exchange for Democrats' agreement to start reining in entitlement programs.

"Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenues, and that doesn't mean increasing rates," Sen. Bob Corker, R-Tenn., told "Fox News Sunday" in mid-March.

It's hard to find House Republicans who say the same thing, however. Most of them echo Boehner, who told ABC: "The president got his tax hikes on January 1. The talk about raising revenue is over." He told reporters in February, "we don't have a revenue problem. We have a spending problem. How much more money do we want to steal from the American people to fund more government?"

Obama and Boehner began talks about a deficit-reduction "grand bargain" in 2011. Boehner suggested new revenues of $800 billion over 10 years in exchange for reductions in entitlements and other programs. Obama and congressional Democrats demanded more revenue, and the talks ended.

It was never clear that Boehner could have persuaded his House GOP colleagues to support his ideas, which were short on detail in some areas. But his actions convinced many people that Boehner would like history to regard him as a Republican speaker who struck a politically courageous deal with a Democratic president to put the nation's fiscal house in better order.

Obama and Boehner tried again in late 2012. Boehner offered changes that he said would generate $1 trillion in new government revenue over 10 years in exchange for roughly the same level of spending cuts, including trims to entitlement programs.

Obama again sought somewhat higher revenue increases. He proposed smaller spending cuts than Boehner wanted. But he offered to slow the cost-of-living increases for Social Security benefits, which liberals consider a huge concession.

It's impossible to know if the deeply divided Congress would have enacted any of these plans. But some independent groups say the December gap was bridgeable, and they despair at the renewed partisanship.

Erskine Bowles, the former Clinton White House chief of staff who co-chaired a deficit-reduction commission, was grim-faced at a Feb. 19 forum in Washington. "The idea of a grand bargain is at best on life support," he said.

The other co-chairman, former Sen. Alan Simpson, R-Wyo., was no cheerier. With Democrats keen on protecting retirement and health-care spending, and Republicans bent on averting income tax hikes, he said, neither side seems ready to make hard choices to curb deficit-spending.

"These guys here aren't interested in winning," Simpson said. "They're interested in making the other side lose ? in fact, rubbing the other side's nose in it."

In interviews, House Republicans typically are most passionate when describing their opposition to income tax increases. Over the years that goal has risen from a GOP policy to a near-religion. House Republicans generally seem less passionate when calling for spending cuts, including entitlement reductions.

Many Democrats, meanwhile, say it's politically impossible for Obama to support trims to Medicare and Social Security without securing further tax increases on the rich ? something he advocated consistently in his 2008 and 2012 campaigns.

The results frustrate groups that say a mix of new revenues and targeted spending cuts is the only feasible way to tame deficit spending.

Scott Lilly, a former House Appropriations Democratic staff director, said it's possible ? though far from certain ? that eventual public unhappiness with the sequester cuts will prompt House Republicans to agree to higher taxes on the wealthy. And that possibly could spur Democratic budget concessions.

"Until you go through that exercise," said Lilly, now at the Center for American Progress, "not only are they not willing to go for a big deal, I don't think there's any way a magician could put the pieces together at this point to make an offer."

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Follow Charles Babington on Twitter: https://twitter.com/cbabington.

Source: http://news.yahoo.com/party-intransigence-dims-hopes-grand-bargain-173237677--finance.html

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