On the Hill

06.08.12

In Secret Meetings, Congress Is Still Fiddling Over the Deficit

As Obama chides Capitol Hill to act on his stalled jobs bill, nearly 50 senators are holding secret meetings on the budget crisis. Patricia Murphy on why there’s no progress there either.

In a Congress that usually operates more like a partisan cesspool than a place of business, a group of nearly 50 Democratic and Republican senators has been working behind the scenes for nearly a year to find a way out of the country's looming budget and debt crisis.  

Contrary to a report this week in Politico, senior staffers for the senators involved describe the process as nothing dramatic. Instead, they say, it is a lengthy, serious attempt by a cross-section of conservatives, moderates, and liberals to use the time before the end of the year to find consensus on a way to avoid the fiscal cliff the federal government will reach, when trillions of dollars in deep spending cuts and tax increases are scheduled to hit the economy.

"We know these issues are hitting us and we know when," a senior Democratic staffer says. "We can at least use the time to get ready."

A senior Republican staffer adds, "The goal is that when we get to the cliff, we'll have a hang glider or even an airplane, something to prevent a crash."

There was little sense that President Obama’s televised appeal Friday morning for action on his long-stalled jobs bill would change the dynamic, especially since House Republicans have made clear they have no intention of voting on the measure.

"We haven't gotten to that breakthrough moment, we're not there yet.”

The bipartisan meetings began last year, after the budget deficit proposal from the Simpson-Bowles commission failed to get the required super-majority on the Hill. Several of the senators involved in that effort, along with another deficit reduction group known as the Gang of Six, decided to work to turn the proposals by Alan Simpson and Erskine Bowles into legislation. 

The group expanded to nearly 50 as more and more senators became alarmed by the state of the American economy, the growing economic crisis in Europe and projections from such agencies as the Congressional Budget Office that U.S. debt is on track to balloon to twice the size of the economy within the next two decades. 

Aides describe the process as "fluid," with large and small groups of senators meeting privately about every two weeks—without staff in the rooms—to hear from leading economists and experts about different areas of concern. As recently as Thursday, former Obama budget director Peter Orszag was called to Capitol Hill to brief senators on the European crisis. 

Others include Simpson and Bowles, New York Fed president William Dudley, and economists Carmen Reinhart and Kenneth Rogoff, who warned senators that national debt will keep the economy from growing.

Knowing that the Senate alone cannot solve the problem, leaders of the group have been careful to keep the White House, as well as the leadership of both parties in both chambers, informed about their progress.

Although interest in finding a solution is high, no specifics have been agreed to yet. "We haven't gotten to that breakthrough moment, we're not there yet," a Republican aide said. "It's like the last two miles of a marathon."

The eventual product of the group is likely to center around tax reform to lower individual rates while closing loopholes, which has broad bipartisan support in the Senate, as well as entitlement reform.

Despite the enthusiasm inside the bipartisan group, others on Capitol Hill describe themselves as somewhere between "skeptical," "frustrated," and "very dubious" about the process. 

Not only does this approach circumvent Senate committees, whose powerful chairmen want to control any changes to taxes and spending, it also follows on the failures of multiple bipartisan groups and gangs charged with solving the problem a long time ago.

"These things get started, get a little traction, and then fall by the wayside," said a GOP aide, whose boss is not participating in the group.

The high-profile "supercommittee" was charged last year with finding $4 trillion in deficit reduction but came away with nothing, forcing $1 trillion in automatic budget cuts beginning in January that aides now say has made other deficit plans much more complicated.  

"They changed baselines, warped assumptions, and took the easy cuts off the table," one official said.

All of those involved say that there is no imminent grand bargain about to emerge from the process. But Democrats and Republicans say that simply agreeing there is a problem and working to solve it is a significant step forward in today's Washington.

"We'll be ready when the politics align, when lightning strikes, or when we become Greece," said a Democratic staffer. "Greece was fine until it wasn't."