Senators seeking $55 billion debt repayment to delay automatic cuts

Senators seeking $55 billion debt repayment to delay automatic cuts

A bipartisan group of senators is negotiating a roughly $55 billion debt “down payment” that would temporarily turn off automatic spending cuts and buy Congress at least six months to work out a bigger deal. 

The down payment would be linked to a deficit-reduction framework that would bind committees with jurisdiction over spending and taxes to an action plan, say sources familiar with the negotiations. 

If a deal is reached and leaders sign off on it, Congress could approve the plan in a lame-duck session. 

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The goal of the group is to keep Congress from going over the so-called fiscal cliff without simply punting into next year the difficult questions over spending and taxes that have stymied their colleagues. 

All of the George W. Bush-era tax rates are set to expire at the end of the year, and automatic spending cuts to defense and non-defense programs, known as sequestration, are scheduled to begin in January. Congress also faces a decision soon on raising the nation’s debt ceiling. 

Speaker John BoehnerJohn Andrew BoehnerSpeculation mounts, but Ryan’s job seen as safe Boehner warns Trump: Don't pull out of Korea-US trade deal GOP Rep: Ryan wasting taxpayers dollars by blocking war authorization debate MORE (R-Ohio) on Tuesday said he was “not confident at all” that Congress and the White House could work out a major debt deal, while Senate Majority Leader Harry ReidHarry ReidThe Memo: Trump pulls off a stone-cold stunner The Memo: Ending DACA a risky move for Trump Manchin pressed from both sides in reelection fight MORE (D-Nev.) said it was too early to give up hope.

The $55-billion down payment under discussion by the group of senators would be equal to about half of the scheduled cuts triggered by sequestration next year to defense and non-defense spending. 

But the bipartisan group faces several hurdles to reaching a deal — most notably whether any tax increases would be included in the $55-billion package. This fight has doomed previous efforts to reach a grand bargain deficit-reduction plan. 

Democratic negotiators say the down payment must include measures to raise new revenues, but Republicans have yet to agree. 

Sen. Saxby ChamblissSaxby ChamblissFormer GOP senator: Let Dems engage on healthcare bill OPINION: Left-wing politics will be the demise of the Democratic Party GOP hopefuls crowd Georgia special race MORE (R-Ga.), one of the key negotiators, said the down payment would “not necessarily” include tax revenues.

“We’re exploring options. We’re looking at all different types of combinations that might be available,” he said.

Another problem is Senate leaders, who are skeptical the group can come up with a deal that will pass muster with the entire Senate and House. 

Senate Democratic sources, however, argue it is more viable than plans floated by Sens. John McCainJohn Sidney McCainSenate's defense authorization would set cyber doctrine Senate Dems hold floor talk-a-thon against latest ObamaCare repeal bill Overnight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions MORE (R-Ariz.) and Lindsey GrahamLindsey Olin GrahamTop Louisiana health official rips Cassidy over ObamaCare repeal bill Senate Dems hold floor talk-a-thon against latest ObamaCare repeal bill Overnight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions MORE (R-S.C.) that would stop the sequester and replace it with a different package of spending cuts and revenue-raising measures. 

Some lawmakers think the McCain-Graham plan would undermine the impetus for fiscal reform, and the GOP effort could also face opposition from President Obama.

“I don’t think the president would agree to anything that turns off the sequester unless there was the big deal agreed to,” said a Senate aide, who was voicing a personal opinion and not speaking for the administration.

The core of the bipartisan group includes Chambliss and Sens. Mark WarnerMark Robert WarnerOvernight Cybersecurity: Equifax hit by earlier hack | What to know about Kaspersky controversy | Officials review EU-US privacy pact Overnight Tech: Equifax hit by earlier undisclosed hack | Facebook takes heat over Russian ads | Alt-right Twitter rival may lose domain Facebook under fire over Russian ads in election MORE (D-Va.), Kent Conrad (D-N.D.), Dick DurbinRichard (Dick) Joseph DurbinSenate Dems hold floor talk-a-thon against latest ObamaCare repeal bill Overnight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions Senate passes 0B defense bill MORE (D-Ill.), Michael BennetMichael Farrand BennetGOP eying 'blue slip' break to help Trump fill the courts NFL star claims he was victim of 'abusive conduct' by Las Vegas police Gardner throws support behind DREAM Act MORE (D-Colo.), Mike CrapoMichael (Mike) Dean CrapoSenate Banking panel approves Trump's Fed, comptroller nominees Harvey damage adds urgency to flood insurance debate Don't let funding for US Forest Service go up in flames MORE (R-Idaho), Tom CoburnTom Coburn-trillion debt puts US fiscal house on very shaky ground Al Franken: 'I make fun of the people who deserved it' The more complex the tax code, the more the wealthy benefit MORE (R-Okla.) and Lamar AlexanderAndrew (Lamar) Lamar AlexanderWeek ahead: Senators near deal to stabilize ObamaCare markets Corker pressed as reelection challenges mount Overnight Health Care: CBO predicts 15 percent ObamaCare premium hike | Trump calls Sanders single-payer plan ‘curse on the US’ | Republican seeks score of Sanders’s bill MORE (R-Tenn.). They have been known at varying times as the Gang of Six, the Group of Six and the Gang of Eight.

With the White House and Congress focused almost exclusively on the election all year, there has been little hope of moving a larger deficit-reduction package this year. 

A lame-duck session would provide little time to negotiate a grand deal. 

“The logical thing for us to do in the lame duck is to put everything on hold for six months and to give ourselves time to do a good job of solving all the fiscal-cliff problems at once, from sequestration to payroll tax to Bush tax cuts,” said Alexander.

Alexander said a down payment would “show good faith.”

“If we put everything from the debt ceiling to the Bush tax cuts and the sequestration on hold for six months while we worked out a solution, I think it would be necessary to buy the six months of time,” he said.

Chambliss said a down payment would be attractive because it could solve the problem of timing the sequence of a deficit-reduction plan. Republicans and Democrats disagree over whether entitlement reform, discretionary spending cuts or tax reform should take place first.

Durbin floated a similar idea last week during the Democratic convention in Charlotte, N.C. Speaking at a breakfast sponsored by Bloomberg LP and the Peter G. Peterson Foundation, Durbin said Congress could “buy” a six-month delay of the fiscal cliff with a down payment.

“The notion is that we have to come up with the savings to show we’re serious,” he said, according to Bloomberg News. He called it “the Dick Durbin plan.”

To get Reid to sign on, the down payment would have to lock the committees of jurisdiction and Republicans into concrete guidelines for a larger deficit-reduction package, say Democratic sources.

That could be difficult. Some critics are doubtful any lame-duck deal would bind the Finance and Appropriations committees to much of anything. 

Any deficit-reduction proposal produced by the Finance and Appropriations committees next year would have to include significant increases in tax revenue, Democrats insist. Democratic leaders also want a framework for future deficit reduction to include guarantees of the “progressivity” of future tax reform.

Democrats have criticized tax reform proposals from House Budget Committee Chairman Paul RyanPaul RyanRyan: Graham-Cassidy 'best, last chance' to repeal ObamaCare Ryan: Americans want to see Trump talking with Dem leaders Overnight Finance: CBO to release limited analysis of ObamaCare repeal bill | DOJ investigates Equifax stock sales | House weighs tougher rules for banks dealing with North Korea MORE (R-Wis.) and Sen. Pat Toomey (R-Pa.) for allegedly shifting the tax burden onto the middle class. While the Ryan and Toomey plans have been vague about what tax deductions would be eliminated to overhaul individual and corporate tax brackets, Democrats say those plans do not add up unless middle-class earners lose popular tax breaks.

“I do think there is a chance of a framework agreement in the lame-duck session, with the details to be worked out by the committees of jurisdiction in the early months of next year,” said Conrad. “With any framework agreement, there should be a down payment.

“I don’t think anyone should give up on a framework agreement being reached in the lame duck,” he said.

Conrad said members of the Gang of Eight had agreed to a framework earlier, but it has to be finalized.

“A lot of things happened since, so that has to be adjusted,” he said.