Deficit cuts on ice

Negotiations between Democrats and Republicans on reducing the deficit are being put on ice until the spring after President Obama’s fiscal commission failed to reach consensus last week.


Sen. Kent Conrad (D-N.D.) is pressing for a bipartisan summit on the issue, but sources tell The Hill this is unlikely, if it happens at all, until the federal government reaches its debt ceiling in the spring.

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But the tax-cut extension deal hammered out between President Obama and congressional leaders may pre-empt a serious deficit-trimming effort any time in the first half of 2011.

The deal would extend the Bush-era tax cuts across the board for two years, greatly adding to the national debt.

It would be tough for either side to attend a deficit-cutting summit after just voting to add to country’s debt.

Plus, Democrats would approach any such summit with the intention of preserving as much social spending as possible, while seeking tax increases to support those measures. With the party seen as capitulating on the Bush-era tax cuts, it would be in a weakened position to negotiate a long-term fiscal package.

“After extending the Bush tax cuts, it would be hard to turn around and say you’re proposing a tax increase,” said Thomas Schatz, the head of the Citizens Against Government Waste, which supports extending the tax cuts across the board.

Republicans, meanwhile, are not ready to come to the table, because they need to articulate exactly what government waste they will target. The GOP ran a successful 2010 campaign on cutting government spending but wasn’t specific about what items would be the first to go.

Schatz said the best move for House Republicans would be to get a list of spending cuts through the House and put pressure on Senate Democrats to defend those programs.

The White House and House Republicans have a similar reason to be cool to the idea of a debt summit: They’d rather present their own budget ideas.

Conrad, the Budget Committee chairman, proposed the summit in the wake of Friday’s failed vote by the president’s debt commission.

But a summit would pre-empt the president’s ability to lay out a comprehensive approach in his 2012 budget proposal, due in February.

“It’s unclear what the summit gets them. They are committed to putting together their proposal,” John Irons of the Economic Policy Institute said of the administration. “Sticking to the regular process seems to be the preferred way going forward.”

With the exception of Rep. Jeb Hensarling (R-Texas), who served on the debt commission, congressional Republicans aren’t embracing the idea, either, since they want to lay out their own budget proposals first.

Conrad argues that if the White House wants to seize the initiative on cutting the deficit from Republicans, it should call a bipartisan budget summit now. He told Fox News over the weekend that he’s gotten no response from the administration about the idea.

According to sources, however, the White House feels like it tried this approach with the debt commission, and the result was Friday’s failed vote.

The deficit commission on Friday voted 11-7 in favor of a report that would have shaved $4 trillion in deficit spending over the next nine years. But the commission failed to give it the 14 votes it needed to get official backing. Without such backing, there will be no congressional votes on the proposals.

Asked Monday about the idea of a budget summit, White House deputy press secretary Bill Burton noted Obama “convened a similar-type event right in the beginning of his presidency. As we go into the new Congress, we’re going to be listening to all the ideas that are out there and considering them as they come.”

He noted that Office of Management and Budget (OMB) Director Jacob Lew and Treasury Secretary Timothy Geithner “will meet with the members of the fiscal commission to discuss their proposals, and we will review the fiscal commission’s proposal as part of the 2012 budget process currently under way.”

No date has yet been set for a meeting between Lew, Geithner and deficit commission co-chairmen Erskine Bowles and Alan Simpson, according to OMB.