Senate leadership wants distance from deficit discussions

Democratic and Republican leaders in the Senate on Tuesday sought to distance themselves from deficit talks being held by a small, bipartisan group of lawmakers. 

The swift pushback, delivered by aides, came after The New York Times reported in a front-page, above-the-fold story that Senate leaders were closing in on a deal to avert the so-called “fiscal cliff.” 

The leaders’ move to keep those discussions at arm’s length underscores the difficulty of reaching a bipartisan agreement on taxes and reducing the deficit.

Senate leaders believe that any preparation by lawmakers in advance of November’s election could be helpful, aides from both sides of the aisle said Tuesday.

But leadership is not endorsing any ideas being floated by members of the Senate’s Gang of Eight, a group searching for the elusive grand deficit bargain.

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Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said, “While the leader has encouraged Republican members to seek solutions, and is aware that many members are discussing potential solutions, these efforts are still in the early stages and he has not endorsed any particular effort over another.” 

Lawmakers and aides say that real negotiations on how to deal with the fiscal cliff can’t begin until after voters decide who will control the White House and Congress next year.

Gang of Eight members, for instance, have said that a win by GOP nominee Mitt Romney would sink their lame-duck ambitions. Romney indicated earlier this year that if he wins, he does not want Obama and Congress to make major decisions before he is sworn in to office. 

The gang is contemplating a three-part plan to replace the $109 billion in across-the-board spending cuts and raft of tax increases — estimated to be worth $536 billion by the nonpartisan Tax Policy Center — that would be implemented around the end of the year.

That plan is favored strongly by retiring Senate Budget Committee Chairman Kent Conrad (D-N.D.), but the structure of it has not been agreed to by the Gang’s Republicans. 

Conrad is pushing a three-part outline: first, avoid the fiscal cliff with a “down payment” of cuts and revenue, then instruct committees to come up with roughly $4 trillion in deficit reduction that would be guaranteed a Senate floor vote.

If the committees failed to act, a new “punishment” would be put into place — a structure similar to the 2011 debt-ceiling deal that created the supercommittee and paved the way for the looming automatic spending cuts.

Conrad has said the new deal would fall back onto a “balanced” plan like the one put forward by President Obama’s fiscal commission — not the across-the-board cuts as outlined by the looming sequestration.

The trigger would not be, Conrad said recently, “something so bad that nobody could live with it.”

Instead, he said, it would be a backup plan “to help you achieve the result necessary.”

Senate aides on Tuesday also made clear that the two parties continued to have stark divides on both the tax side — including over whether to retain all or just some of the Bush-era tax rates — and entitlement spending.

Stewart, for instance, stressed that McConnell would lean against any plan, like the Bowles-Simpson proposal, that raises taxes.

“He does not believe that raising taxes should be considered a solution to an out-of-control spending problem,” Stewart said. “And remember, until there is legislative text and a [Congressional Budget Office] score, it will be impossible to form an opinion on the merits of any particular proposal.”

Democrats were equally cool to the talks.

One senior Democratic aide said “nothing has buy-in from leaders at this point except to support the idea of people continuing to talk.”

Senate Majority Leader Harry Reid (D-Nev.) has said he wants a “big” deal in the upcoming lame-duck session that would put a multitrillion-dollar dent in the national debt.

But Reid also signed a letter last month with other Democrats that opposed using Social Security cuts in any debt deal. Meanwhile, Bowles-Simpson, the proposed Gang of Eight fallback, calls for cuts in Social Security benefits, and reins in other entitlement spending as well. 

Reid disparaged the work of the gang of lawmakers last November, dismissing it as “happy talk” that had not been put into legislative language.

“If someone has a proposal about reducing the deficit, the debt, here’s my suggestion: Put it in bill form, in writing, not all these happy statements about what people think can be done,” Reid told reporters at the time. “I’m stunned by the Gang of Six that we hear so much about.”

Senate Majority Whip Dick Durbin (D-Ill.), Conrad and Sens. Mark Warner (D-Va.), Saxby Chambliss (R-Ga.), Tom Coburn (R-Okla.) and Mike Crapo (R-Idaho) made up the original Gang of Six. Sens. Mike Johanns (R-Neb.) and Michael Bennet (D-Colo.) have bumped the Gang’s numbers up to eight.

The negotiating group has not expanded any further, sources said, although a wider group of centrists keeps tabs on their activities. This group includes defense hawks worried about the sequester, including Sens. Lindsey Graham (R-S.C.), Joe Lieberman (I-Conn.) and Lamar Alexander (R-Tenn.).

The Gang of Eight has been unable to nail down the key ingredients of its plan and might not be able to until after the election. While the Gang’s members have set a $4 trillion goal for deficit reduction, they have not singled out a budget baseline, nor the scope of entitlement reforms. 

“There is not anything completed for leaders to distance themselves from,” a Senate aide said. 

Like Reid, influential conservative activist Grover Norquist has mocked the Gang for its lack of specifics.

Meanwhile, Senate Finance Committee Chairman Max Baucus (D-Mont.) has been preparing for the post-election deficit debate by trying to develop plans of attack under different electoral scenarios.

Baucus meets regularly with officials like House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Treasury Secretary Timothy Geithner, and has gotten together recently with Federal Reserve Chairman Ben Bernanke and Christine Lagarde, the head of the International Monetary Fund. 

Aides say they believe lawmakers will be able to hit the ground running come November, given the amount of deficit discussions that have occurred in recent years.

In addition to the failed supercommittee and Bowles-Simpson, President Obama and House Speaker John Boehner (R-Ohio) tried to reach a broad deal last summer, while Vice President Biden has also led deficit talks. 

“We won’t just be coming into this blind,” a Senate GOP aide said.

— This story was updated at 10:19 a.m.