Dems gain upper hand in deficit talks

Senate Majority Leader Harry Reid (D-Nev.) said Tuesday that Democrats will block Republican efforts to torpedo cuts to the Pentagon should the supercommittee on deficit reduction fail.

Reid’s threat is yet another signal that Democrats are preparing for a supercommittee flop, and are largely comfortable with the cuts that would be triggered if there is no bipartisan agreement. 

As Republican leaders vow that failure is “not an option,” Reid is growing increasingly pessimistic and already looking ahead to the consequences of missing next week’s Nov. 23 deadline.

ADVERTISEMENT
That dynamic has Democrats saying they have the upper hand in the negotiations, with some liberals privately rooting for sequestration cuts to be triggered. Unless Republicans cave on tax increases, there is little reason for Democrats to strike a deal because sequestration does not call for structural reforms to Medicare, Medicaid or Social Security. 

Automatic cuts to Medicare would be capped at 2 percent and limited to insurance companies and healthcare providers while Social Security and Medicaid would be exempt.

The Defense Department is slated for $500 billion in cuts if the Joint Select Committee on Deficit Reduction does not produce an agreement with at least $1.2 trillion in spending reductions.


Republican lawmakers have already called for halting those cuts. A leading conservative, Sen. Jim DeMint (R-S.C.), said Republicans have “until next election to fix this thing.” 

The cuts in the trigger do not go into effect until 2013.

Republicans cite the warning from Leon Panetta, President Obama’s Defense secretary, who has cautioned that slashing the Pentagon’s budget would hollow out the military. 

Panetta warned lawmakers this week that a supercommittee failure would force him to slash 2013 spending by $100 billion.

But Reid said Tuesday that Senate Democrats would not allow non-defense discretionary programs to bear the brunt of automatic cuts and defense programs to dodge the blade. 

“If the committee fails to act, sequestration is going to go forward. Democrats are not going to take an unfair, unrealistic load directed toward domestic discretionary spending … and take it away from the military,” Reid said. 

“Those who are — who talk about retracting the sequester are wrong and are not living up to the agreement we reached to cut our nation’s deficit last July,” Reid added. 

Should the super-panel fall short, a politically awkward situation could ensue, with the top congressional Democrat at odds with Obama’s top military official. 

Sens. John McCain (R-Ariz.) and Lindsey Graham (R-S.C.) are urging their colleagues to oppose automatic cuts to defense. 

ADVERTISEMENT
“The consequence of a sequester on the Defense Department would set off a swift decline of the United States as the world’s leading military power. We are staunchly opposed to this draconian action,” they said in a joint statement Monday. “This is not an outcome that we can live with, and it is certainly not one that we should impose on ourselves.”

In the House, Armed Services Committee Chairman Buck McKeon (R-Calif.) has been rallying against the Defense cuts for months. He even went so far as to say he would favor increasing taxes over cutting the Pentagon’s budget, though he later walked those comments back. 

Reid said the Democratic members of the supercommittee still think they can strike a deal, but acknowledged he is not as optimistic as he used to be.

He cited the influence of the Taxpayer Protection Pledge, signed by nearly every Republican in Congress. The pledge, sponsored by Grover Norquist, president of Americans for Tax Reform, requires signatories to oppose legislation that raises taxes unless the increases are completely offset by tax cuts. 

Reid read to reporters Norquist’s Monday statement to The Hill that Senate and House GOP leaders had assured him they would not raise taxes to reduce the deficit. 

“You have to admit it is a little disheartening,” Reid said. 

Sen. Charles Schumer (D-N.Y.), a top Reid deputy, last week predicted the supercommittee would fail. 

Republicans are sounding a more bullish tone. 

“My view is that failure is not an option,” said Senate Republican Leader Mitch McConnell (Ky.). “The American people need an outcome. They expect an outcome. They deserve an outcome. And I expect to get one.” 

House Majority Leader Eric Cantor (R-Va.) made similar claims on Monday.

Reid met with House Speaker John Boehner (R-Ohio) on Tuesday to discuss the supercommittee and other topics. Some congressional aides interpreted that as a sign that leaders would take over the stalled deficit-reduction talks in the final days. Reid and Boehner, who have a good working relationship, struck a deal this spring that averted a government shutdown. 

Sen. Patty Murray (Wash.), the Democratic co-chairwoman of the panel, has briefed Reid regularly on the talks, but the Democratic Senate leader denied that he is taking over. 

“I don’t think there’s anything to kick up to the leadership level until there’s something that we can take a look at. There’s nothing to look at, at this stage,” he said. “At least as far as I know.”

A leadership aide said Reid and Boehner are “not about to dive in.” 

Other Democrats, including members of the Senate Gang of Six — an informal bipartisan deficit task force — are preparing in case the supercommittee fails.

Sen. Kent Conrad (D-N.D.), a member of the Gang of Six, says the group has a bill drafted to move in case of failure. He said the package would cut nearly $4 trillion from the deficit — or nearly $3 trillion, not counting the $900 billion in cuts agreed to by Congress in August. 

“We have a bill,” Conrad said.

But Conrad said he has refrained from pushing it in order not to step on the supercommittee. He also noted that a measure crafted outside the supercommittee would not receive the same expedited consideration in the Senate and House. 

Conrad said the ratio of spending cuts to tax increases is “more than 2 to one” and estimated the increase in tax revenues at roughly $1.2 trillion. Aides to other members of the Gang of Six say the bill would need a lot of changes before reaching the Senate floor. These aides say members of the group have agreed to a legislative framework but still have to sign off on the legislative details. 

“In August, we had drafted texts for the things they agreed on. It wasn’t a full package. That was circulated among staff. No members signed off on it,” said an aide to another member of the group. “It would need to be revised.”

Conrad’s staff has led the drafting process, the source said.

— John T. Bennett contributed to this article.


More in Senate

Leaders gain from Cruz gambit

Read more »