As Congress prepared to leave town for six weeks on the campaign trail, lawmakers ensured that when they return for a post-election session in November, they will have a heaping pile of pressing work awaiting them.
Policymakers live in fear of the impending “fiscal cliff” — a set of tax hikes and spending cuts due Jan. 1 that most analysts believe will be a major blow to the economy, the military and domestic programs.
Georgia Republican U.S. Sen. Saxby Chambliss is a leader of a key group of bipartisan senators that has been trying to figure out a deal on the deficit for more than 18 months. He said the group will pitch a two-step process: a “down payment” that could be tens of billions of dollars to offset the immediate threat along with a framework for a major long-term debt deal, with detailed legislation coming sometime in 2013.
Atlanta Mayor Kasim Reed is eager for a deal. The federal government is funding 50 police officers, 75 firefighters and a $100 million streetcar project that could be hit, he said, by the scheduled across-the-board cuts in federal programs, known in Washington-ese as “sequestration.”
Reed traveled to Washington on Thursday for a news conference along with other mayors to advocate for an alternative to the sequestration cuts that includes new tax revenue.
“We are sitting there asking our colleagues in Congress, our friends, to do your work,” Reed said. “That’s what we have to do in cities. We don’t get to duck and dodge and hide. You all passed the sequestration measure as a last resort, not a first resort. So do your job, Congress.”
There has been much posturing and little dealmaking on the issue so far. Each party blames the other for the failure of a special deficit committee last year that led to sequestration, which was a backup plan intended as a distasteful motivator for a deal to reduce long-term deficits.
The Republican-controlled House passed a bill in May to spare the military and move all the cuts to other agencies. Democrats objected to slashing safety net nutrition programs, education and other priorities. House Democrats’ alternative, which would end certain tax breaks for oil companies and impose a surtax on top earners, was stiff-armed by Republicans, who oppose any tax increases.
Compelled by Congress, the White House recently released a breakdown of where the cuts would fall on specific agencies and programs. Most would see an 8.2 percent cut. Military programs would see a 9.4 percent reduction, except soldiers’ pay and benefits.
President Barack Obama offered a deficit reduction plan a year ago that includes higher taxes on the wealthy, reduced payments to Medicare providers, and some agency cuts, but the White House — at least publicly — has not yet attempted to broker a deal with congressional Republicans.
“The president and the Senate, neither one of them has shown any leadership and given us any indication of what they will sign. All they say is they won’t sign what we’ve passed,” U.S. Rep. Austin Scott, a Tifton Republican, said while questioning an Obama administration official this week at a hearing on sequestration.
Chambliss said the shape of a compromise will be determined by the elections.
The so-called Gang of Six, which is led by Chambliss and Sen. Mark Warner, D-Va., is preparing proposals for the different scenarios. If Republicans win the White House and gain control of the Senate, their bargaining hand would be strengthened significantly. If Obama wins re-election, it could force Republicans’ hand on taxes.
Chambliss said he hopes the fiscal cliff will provide the motivation for a massive catch-all deal that addresses the imminent threat while also bringing at least $4 trillion in deficit reduction — a figure experts say is necessary to stabilize the fiscal ship.
“If we could come up with a major deal, then I think it has — I know it has the potential to answer everything involved in the fiscal cliff and sequestration,” Chambliss said. “If we’re going to have tough votes to make, then let’s make the tough votes and not solve it piecemeal.”
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