Short-term debt deal won't mask big barriers ahead

WASHINGTON (AP) — Hold the champagne.

Even if Congress reaches a last-minute or deadline-busting deal to avert a federal default and fully reopen the government, elected officials are likely to return to their grinding brand of brinkmanship — perhaps repeatedly.

House-Senate talks are barely touching the underlying causes of debt-and-spending stalemates that pushed the country close to economic crises in 2011, last December and again this month.

Late Tuesday, the GOP-controlled House dropped efforts to craft a bill to raise the debt limit and fully open the government. House members will wait for the Democratic-controlled Senate to act, which could push a final resolution past Thursday. That's when administration officials say federal borrowing powers will be tapped out.

Still, many in Congress expect a resolution, even if it's a few days late. At best, however, lawmakers and the White House will agree to fund the government and raise the debt limit for only a few months. They also will call for yet another bipartisan effort to address the federal debt's major causes, including restricted revenue growth and entitlement benefits that rise automatically.

And yet, top advocates say they've seen virtually no change in the political dynamics that stymied past efforts for a compromise to end the cycle of brinksmanship and threats to harm the economy.

Republicans still adamantly oppose tax increases. Powerful interest groups and many Democrats still fiercely oppose cuts in Social Security and Medicare benefits. And congressional rules still tempt lawmakers to threaten economic havoc — by sending the nation into default — if the opposing party doesn't yield to their demands.

"We're probably going to have to go through this a few more times," said Bob Bixby of the bipartisan Concord Coalition, which advocates budget reforms. Even if a compromise plan this month wins House, Senate and White House approval, Bixby said, it will leave fundamental problems that "they haven't done anything to address."

Henry J. Aaron, a Brookings Institution scholar who supports unprecedented legal action to avert future debt showdowns, agreed that three or four months of breathing room is a small victory. "If all we achieve is a repetition of this charade," Aaron said, "we will not have achieved much."

The political landscape is littered with once-hopeful bipartisan efforts to reach a "grand bargain" — or even a modest bargain — to slow the growth of the nation's $16.7 trillion debt and to make spending and revenue trends more sustainable.

There was the Simpson-Bowles plan, first issued in 2010, and revised early this year. The revised version called for about $1.3 trillion in new revenues over 10 years, from various sources (about half the original plan's target). It would slow the growth rate of Social Security benefits and raise the eligibility age. It would limit popular tax deductions such as those for charitable gifts and mortgage interest.

The Simpson-Bowles plan remains widely praised nationwide, and largely ignored in Congress.

Then there were the 2011 secret talks between President Barack Obama and House Speaker John Boehner, R-Ohio. Boehner suggested $800 billion in new revenues over 10 years — less than Obama wanted — in exchange for widespread spending cuts, including curbs on Medicare and Social Security.

It was never clear whether Obama could have pushed the plan through the Democratic-controlled Senate. It didn't matter, because Boehner's GOP colleagues vehemently objected when details leaked, and the talks collapsed. Efforts last year to revive negotiations also failed.

A bipartisan congressional "supercommittee" fared no better. Both parties had agreed to supposedly unbearable "sequester" spending cuts to goad each other into big compromises to find a better way. But negotiations faltered and the clumsy-by-design sequester cuts — automatic and across the board — became law this year.

All these efforts failed for the same basic reasons. Liberals and conservatives, Democrats and Republicans, would have had to swallow painful concessions that they don't believe are warranted. The lure of the "common good" couldn't match the power of sharply partisan regions and districts whose voters vow to punish lawmakers who compromise.

Republicans oppose higher taxes, even though today's taxation levels are relatively low, historically. Democrats oppose curbs in the growth of Medicare and Social Security, even though analysts for years have said the automatic growth of these "entitlement" programs is unsustainable long-term.

Americans are accustomed to relatively high levels of government service at relatively low levels of taxation. Millions are unwilling to undo that arrangement in pursuit of deficit reduction.

That makes it easier for powerful, well-financed groups to resist almost any change in government programs or taxes that favor them.

"We've been extremely adamant that Social Security shouldn't be part of this discussion at all," said David Certner, legislative counsel for AARP, the big lobbying group for seniors. Social Security has its own funding source — a payroll tax — Certner said, and it must not "become a piggybank for other programs."

As for Medicare, Certner said, he has never seen so many AARP members loudly declaring, "these are my benefits, I've paid into them over the years," and they must not be reduced.

Countless other interest groups take similarly unyielding stands, say lawmakers and advocates on all sides of the debate. Bixby said such groups "will never be part of a solution."

The bipartisan budget conferees who are envisioned in the debt-and-shutdown proposals in Congress may start with fairly small ambitions, such as looking for ways to replace some of the more painful "sequester" cuts with spending reductions elsewhere. It's not clear whether that would avert another government shutdown and default threat in a few months.

The best hope, Bixby said, is to somehow find "a centrist coalition to pass something" that includes new revenues and curbs to entitlements. But so far, he said, "the consensus has been to shut down rather than compromise."

With a bipartisan accord so hard to reach, some advocates say the president and the courts must find a way to stop congressional factions from extracting concessions from the president's party by threatening a default on U.S. obligations. Aaron said it's legally contradictory to empower Congress to enact spending laws and then threaten to block the higher borrowing cap needed to pay the bills lawmakers incurred.

Aaron wrote in The New York Times, "Failure to raise the debt will force the president to break a law — the only question is which one." The Constitution, he said, requires the president to spend what Congress tells him to spend, collect only those taxes Congress approves "and to borrow no more than Congress authorizes."

Aaron says Obama should ignore the debt ceiling if Congress refuses to lift it in time. The White House rejects that idea, and even Aaron concedes it probably would trigger an impeachment and massive court challenge.

Rep. John Fleming, R-La., summed up the challenge any new bipartisan conferees will face. Asked how the two parties might reach an accord, Fleming suggested Democrats must cave.

"America is catching on to the fact that we have a president who seems unlikely to solve America's problems," he said. "We have two totally different visions of America."

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Follow Charles Babington on Twitter at https://twitter.com/cbabington

Source: http://news.yahoo.com/short-term-debt-deal-wont-mask-big-barriers-070315966--finance.html
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