By Bernie Becker - 09/19/11 12:47 PM EDT
A centrist Democratic group is trying to pump the brakes on the push to have the deficit-reducing supercommittee “go big.”
With a large group of senators among those pressing the supercommittee to perhaps double its $1.5 trillion mandate, Third Way is instead recommending that the group concentrate on hitting the target needed to avoid across-the-board cuts.
To help that process along, the think tank has released a blueprint for the panel that reduces deficits by more than $1.65 trillion over a decade — enough to pay for President Obama’s $447 billion jobs plan and to slash the $1.2 trillion needed to avoid the wide-ranging spending cuts. Third Way plans to widely release its plan on Monday.
But with Republicans and Democrats apparently still divided over taxes and entitlements, McConaghy added that it could be counterproductive for the supercommittee to swing and miss going for a big package — especially in the aftermath of this summer’s debt-ceiling debate.
“Perception absolutely matters here, especially with investor confidence,” McConaghy said. “If they see another affirmation that Washington can’t work and is dysfunctional, that will just cause more uncertainty in the markets.”
President Obama and top Republicans like Mitch McConnell of Kentucky, the Senate minority leader, are among the officials who have expressed optimism that the supercommittee could actually exceed its mandate.
A bipartisan group of three dozen senators — more than a third of the chamber — is also pressuring the panel to go big, as is a group of more than 60 other observers that includes the co-chairmen of recent bipartisan deficit committees and several former Treasury secretaries, among others.
With the legislation creating the supercommittee already putting roughly $1 trillion of deficit cuts into place, the panel would have to find an additional $3 trillion or so to craft a grand package.
But some supercommittee observers have also stressed that pressing the panel to go big could put too much pressure on the group.
In its plan, Third Way aims to eliminate certain tax breaks, wring savings out of Medicare and Medicaid and scrap what it sees as unneeded Pentagon spending.
The package’s $434 billion in fresh revenues includes a scaling-back of the deduction for mortgage interest, elimination of tax expenditures for the oil-and-gas industry and the repeal of the write-off for corporate jets that played a prominent role in the debt-ceiling debate.
On the mandatory spending front, Third Way proposes $30 billion in savings from reforming Fannie Mae and Freddie Mac and $130 billion in deficit cuts from Medicare and Medicaid, through decreased payoffs to teaching hospitals and other methods.
The think tank’s $420 billion in defense cuts includes changes in deployment requirements and the scaling-back of certain weapons systems.
Supporters of the “go big” approach — like Erskine Bowles and Alan Simpson, the co-chairmen of the president’s fiscal commission — have argued that it would actually be easier for a broad plan to attract bipartisan support, as practically every interest group would have to make some sort of sacrifice.
But McConaghy counters that Third Way’s plan also involves shared sacrifice, and that the supercommittee hitting its goal could act as the second part of a three-step grand bargain process.
“We have supported grand bargains in the past — and if they can get there, that’d be great,” McConaghy said about the supercommittee. “But looking at the political realities, we see the supercommittee as having a better chance to make tax and entitlement reform easier to do in the next year and a half.”