Gang of Eight’s proposals
In pursuit of a grand bargain to reduce the federal debt, the bipartisan group of U.S. senators led by Saxby Chambliss of Georgia and Mark Warner of Virginia has made the following proposals in the past:
- Cap for four years the day-to-day budgets of Cabinet agencies.
- Curb the growth of Social Security benefits by moving to a lower inflation adjustment for annual cost-of-living updates.
- Reduce but not eliminate tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement savings and for families with children.
- Assign congressional committees to devise further cuts in Medicare, Social Security, farm subsidies, defense spending and health programs.
- Overhaul laws governing medical malpractice to generate further savings from the health care system.
After two years of working toward a bipartisan budget deal, the Senate’s “Gang of Eight” was mostly sidelined as leaders negotiated a last-minute deal last week that put off fiscal reckoning for two months.
The gang, a self-appointed group led by Republican Sen. Saxby Chambliss of Georgia and Democratic Sen. Mark Warner of Virginia, has proposed a major budget accord to slash future deficits by $4 trillion through spending cuts, entitlement reforms and tax revenue increases. But so far it has not been able to build a critical mass of support — or even draft a bill — despite having passed two major crisis points that were meant to inspire a so-called grand bargain. A third arrives soon.
Experts on Congress and budget policy said the group has broken some of the partisan ice in the Senate, but their impact is unclear as they continue to ram up against entrenched leadership and interest groups at the parties’ poles.
Steve Bell of the Bipartisan Policy Center, who has worked with the group, said the gang in its present form is likely finished.
“They worked so hard for two full years in so many different ways and it just didn’t happen,” Bell said. “… They called for specifics that their party opposed, and they got nothing out of it.”
A new Congress arrives with fractures for the group, which consisted of Chambliss; Warner; Tom Coburn, R-Okla.; Kent Conrad, D-N.D.; Mike Crapo, R-Idaho; and Dick Durbin, D-Ill.; before recently adding Michael Bennet, D-Colo.; and Mike Johanns, R-Neb.
Conrad is retiring. Crapo is dealing with legal and political fallout after pleading guilty Friday to driving under the influence of alcohol. Bennet is taking on a new role as head of the Democratic Senatorial Campaign Committee — a post that could be at odds with striking a big deal with senators he’s trying to unseat in 2014, including Chambliss.
Aside from individual concerns, the past two years have exposed the structural challenges facing the gang. Major legislation in Congress typically comes from elected leadership and committee chairmen, not a self-appointed bipartisan working group. In both the 2011 debt-ceiling debate and the year-end talks on the “fiscal cliff,” top leaders were the key negotiators — and Senate Minority Leader Mitch McConnell and Vice President Joseph Biden made the deal.
But in an interview last week, Chambliss said the group has had an impact and does have a future.
“I have no idea whether we’ll be seven or whether we’ll add somebody on the Democrat side [to replace Conrad], but I think we will meet immediately and decide what role we can play,” Chambliss said. “It may be a supporting role, which is what we’ve been in for the last three or four months, or it may be something more active, I don’t know. It kind of depends on what kind of turn the fiscal issue takes.”
Unlike the 2011 debt-ceiling debate — when the gang produced a policy outline that earned the support of more than 40 senators and gobs of attention — Chambliss and the others did not meet and mostly stayed behind the scenes during the fiscal cliff negotiations.
Neither strategy netted the desired result, but Chambliss said several of the gang’s recommendations were included in the fiscal cliff deal, which permanently extended nearly all the George W. Bush-era tax cuts while putting off spending cuts for two months and not touching entitlements.
Chambliss said the cliff deal’s compromises on estate, dividend, capital gains and alternative minimum taxes all hewed closely to recommendations provided by the gang. Estate taxes were set at 40 percent for estates worth more than $5 million, a threshold that will rise with inflation. Dividend and capital gains taxes are now 20 percent for those in the $400,000-per-year tax bracket and 15 percent for investors who make less. The deal also permanently indexes the alternative minimum tax to inflation to keep it from hitting the middle class.
He said he was in touch with Speaker John Boehner, a close friend, and McConnell throughout, while his Democratic colleagues consulted with the White House and leaders on their side.
Aside from offering advice, the group has bridged divides, said Maya MacGuineas of the Committee for a Responsible Federal Budget, who has worked closely with the gang.
“They have changed the dynamic of the Senate,” she said. “I have watched meetings, huge bipartisan groups, meeting in the Senate, which are so different from years before. I’ve watched them sit through bitter meetings on health care policy, tax policy, in a bipartisan way working through the nitty-gritty.”
She pointed to a key moment in the debate over raising the federal borrowing limit in 2011 when more than 40 senators backed a budget deal that would shave $4 trillion from future deficits by reforming entitlement programs, capping spending and increasing tax revenue.
But that proposal was blamed in part for sinking a grand bargain between Boehner and President Barack Obama, as Obama reportedly shifted demands once he saw Senate Republicans agreeing to more tax revenue than he had proposed. The behind-the-scenes route is a necessity, said Jim Kessler of the centrist Democratic think tank Third Way.
“The pressure can come from rank-and-file members — and it has in the past, and it’s forced action — but the deal is always cut by leadership,” Kessler said.
But a major deal has been Captain Ahab’s elusive white whale for Obama, many members of Congress and business leaders — who have pumped tens of millions into a public advocacy campaign called Fix the Debt. A slew of outside groups featuring former congressmen and other big names have tried to counteract conservative and liberal groups pushing against aspects of a big deal — including raising tax revenue or trimming Social Security benefit increases.
It has not worked yet.
Conrad, who served as chairman of the Senate Budget Committee but was blocked by Senate leaders from putting forth a budget, announced his retirement nearly two years in advance in order to focus the end of his career on a major fiscal deal. In his final days, with such a deal nowhere in sight, he reacted with restraint.
Lingering near the Senate floor, Conrad was asked how frustrated he was at the current state of affairs.
“I can’t even put it into words. And I’m Scandinavian, so I handle these things, but ugh,” he said, shaking his head.
Conrad will not be around for the next crisis point that grand bargain supporters hope provides a deal, when scheduled across-the-board federal budget cuts and the nation’s borrowing limit form a dangerous economy-stifling cocktail around the end of February.
Bell, of the Bipartisan Policy Center, said the only real impetus to act would be “pain” on the average American — perhaps in the form of a stock market dive. He was pessimistic that a deal could ever come outside the normal power channels of Congress, and he used the example of a potential Republican primary challenge to Chambliss in 2014 to point out the political peril for any member of Congress to sign onto a grand bargain.
“What happens is the poles of both parties make it extremely difficult to have anything emerge from the Gang of Six, the Gang of Eight or even the 40 senators who signed saying we need to have something big,” Bell said. “Because everyone can hide behind the rhetoric — ‘We need a big deal.’ But when it comes down to specifics, which is what Coburn and Chambliss and Conrad and those folks did, most people start running away.”
Alex Brill of the conservative-leaning American Enterprise Institute was more optimistic — at least in the long run. Brill called the fiscal cliff deal “a huge setback,” and he doesn’t expect the next two months to bring anything much better. Still, he said the fact that both parties are talking about budget reform is a major leap from just a few years ago when not even Republicans would broach the topic.
“There are a lot of members who sympathize with what they’re advocating for,” Brill said of the gang. “Not only do I think it’s reasonable, but I think it’s an important voice that’s pushing — either behind the scenes or overtly — the entire Senate.”
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