Bowles sees two-thirds chance Obama, Congress won't get deficit deal

The former co-chairman of President Obama’s debt commission said Wednesday there’s a two-thirds chance Congress and the White House will fail to reach a deficit deal by the end of the year.

Erskine Bowles, the longtime politician who led Obama’s commission with former GOP Sen. Alan Simpson (Wyo.), said Congress and the White House remain far apart in talks to stave off the tax hikes and spending cuts known as the fiscal cliff.

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“I am really worried,” Bowles said. “I believe the probability is that we are going over the cliff. I think it would be horrible and devastating.”

He said there’s a one-third chance the sides will come together and reach a deal in a lame-duck Congress in December. He also posited a one-in-three chance the two sides won’t reach a deal until January, after taxes go up on most households.

Bowles’s most dire assessment is that there is a one-third chance a deal will not be reached until much later, which he said would create a crisis leading to “chaos.”

Bowles made the comments to reporters at a breakfast sponsored by the Christian Science Monitor a day after meeting with Obama. 

“I can guarantee you that there is no question in my mind that the White House is absolutely serious about getting something done,” Bowles added. “I wish the discussions had started earlier.” 

Bowles is set to meet with Speaker John BoehnerJohn BoehnerThe Trail 2016: The establishment comes around Pete King: Cruz 'gives Lucifer a bad name' White House: Boehner was just being honest about Cruz MORE (R-Ohio) later on Wednesday.

Senate GOP leader Mitch McConnellMitch McConnellOvernight Finance: House rejects financial adviser rule; Obama rebukes Sanders on big banks Senators roll out changes to criminal justice bill Sanders is most popular senator, according to constituent poll MORE (Ky.) described talks this week as being at an impasse.

The White House is insisting that Republicans agree to raise tax rates on households with annual income above $250,000, while the GOP wants Democrats to agree to deep spending cuts and meaningful entitlement reform.

Senate Democratic leaders on Wednesday raised their asking price, calling for a deal to include a hike to the nation’s debt ceiling. Senate Democratic Whip Dick DurbinDick DurbinSenators roll out changes to criminal justice bill Let the Democratic veepstakes begin Senate Democrats push climate change bond bill MORE (Ill.) also said a short-term deal should not include entitlement reforms.

Bowles said the White House has flexibility on taxes but above all wants to lock in revenue and viewed higher rates as its best guarantee for doing so. Republicans have suggested work on taxes could be put off to 2013 so that Congress could tackle comprehensive reform, but Bowles said the White House believes those talks could unravel under pressure from lobbying groups trying to save favored breaks.

He said Obama is open to a combination of rate increases and loophole closings.

The White House also wants Social Security discussed on a separate process. He said the White House believes any savings in Social Security should not be used for deficit reduction, but to shore up the program.

Bowles said he believes the two sides are not talking enough about cutting spending, something that could help Republicans in the bargaining game.

“We need to talk more about the spending side of the equation,” Bowles said.

Bowles said the White House needs to offer more on entitlements. 

Obama’s budget proposals on entitlements are “simply not enough to slow the rate of healthcare compared to the rate of the economy,” Bowles said.

He praised Rep. Tom Cole (R-Okla.) for suggesting a compromise that would allow tax rates on annual income above $250,000 to rise. He said more members need to deviate from the party line to secure a compromise.