Six Members of Supercommittee Break Away in Bid to Forge Debt Deal

Six supercommittee members have broken away to try to make a deal on debt reduction. By Eleanor Clift.

The Vegas money still would be on no deal, but a breakaway group of six lawmakers—half the 12-member debt supercommittee—have been meeting separately from the larger group, dining together over Chinese food and trying to find a compromise they can support. Some Democrats thought they heard the sound of ice breaking this week, when Republicans used the word revenue, as in the federal government needs more of it. Democratic Sen. Dick Durbin called it “a breakthrough.”

Republicans then went into overdrive explaining the difference between revenue and taxes, and it quickly became apparent there was less there than imagined.

Like the Japanese movie Rashomon, the supercommittee is circles upon circles of perception superseding reality. “It’s the same dynamic as the debt deal,” says Matt Bennett, of the centrist Democratic group Third Way. “It looks like there is forward progress, and the true believers yank the leaders back.”

The brief burst of optimism was prompted by Republican Sen. Pat Toomey’s tax proposal to the supercommittee, in which he calls for trimming deductions for home mortgage interest and charitable deductions to raise revenue, while keeping in place the Bush tax cuts and lowering the top rate for high-income taxpayers from the current 35 percent to 28 percent.

Democrats, in an internal analysis of the Toomey plan, called it “a windfall for millionaires, and a large tax increase for struggling working families.” Even so, Toomey appeared to cross lines drawn by anti-tax activist Grover Norquist in wanting to cut back on deductions and on the personal and dependent exemptions that taxpayers enjoy.

Is it a breakthrough? Depends, says Bennett. “We don’t know whether it’s basically an opening bid they’re willing to negotiate around, or it’s their best and final offer.”

With time running out before the panel’s November 23 deadline, some of the ideas reportedly before the committee include means-testing for Social Security on people with adjusted gross incomes over $1 million; ending the Bush tax cuts for incomes over $1 million; adjusting the way inflation is calculated to save on Social Security cost-of-living increases; and ending many subsidies for energy, chiefly oil and coal, but also the money for new sustainable energy, which is exhausted anyway. Some of the money saved on energy incentives would go to an infrastructure bank; the rest to deficit reduction.

The group of six is negotiating in good faith, but each side has its political prerogatives to protect. “We want to get a deal, but we don’t want to give away our soul in the process,” says a Democratic leadership aide. “How much can you give away before you’ve lost the essence of why you came here?”

Republicans have a somewhat different calculation. They want to see how little they can give away without getting blamed. Their worry is getting opposed in a primary, and having their money dry up when all the Tea Party freshmen go on television to say they were sold out.

A Democratic leadership aide put the odds of a successful deal at 30 to 35 percent, with success defined as reaching $1.2 to $1.4 trillion in cuts. The days of the so-called Grand Bargain of $4 trillion are gone, he says. And failure is an option. “If we come out of here with nothing, the voters will say we told you so…. There’s a reason everybody hates us, we’re dysfunctional. They’re right.”

The rump group of six includes Michigan Republicans Dave Camp and Fred Upton, both longtime members of the House, and Ohio freshman Republican Sen. Rob Portman, who was President Bush’s budget director. The Democrats are represented by two veteran senators, John Kerry and Max Baucus, along with Maryland Rep. Chris Van Hollen.

If the six can find a deal they can support, they would need one more member to achieve a majority, and speculation is that Arizona Republican Jon Kyl might be the seventh vote. “If the train starts leaving, do more people get on, or get off?” says a Hill source. And if the supercommittee does get a deal, can it pass the House and Senate?

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The sticking point remains taxes—what a leadership aide calls “constitutional blue slip stuff,” meaning revenue that according to the Constitution originates in the House—and until the Republicans put what the aide calls “real money on the table,” a deal is out of reach. Democrats view revenue as taxes, not airport fees, which Republicans have offered up as a sweetener.

As the clock ticks down and the politicians dither, there is a real-time example of what happens when governments cannot confront their problems. The unraveling of the European economy is setting the stage for whatever the supercommittee does—or doesn’t do. Standard & Poor’s downgraded the U.S. credit rating after the debt ceiling debacle, and the other two rating agencies are poised to follow suit if the supercommittee fails to act, or does just the minimum of $1.2 trillion.

“The minimal is really just smoke and mirrors,” says Bennett, and the markets would likely react as if it were a failure. “What the markets are saying is the industrialized West can’t govern itself.”

The supercommittee is Congress’s last best chance to prove them wrong.