Wednesday, August 10, 2011

Reid Not Looking for Budget Compromise

Senate Majority Leader Harry Reid has announced his appointments to the "supercommittee" that is supposed to come up with $1.5 trillion in deficit reduction by the end of the year and thus avoid automatic cuts of $1.2 trillion to discretionary spending. Instead of appointing moderate senators who have spent the past year seeking compromise, like the Democrats from the "Gang of Six," he has chosen two reliable liberals who will be certain to oppose entitlement cuts and insist on tax increases, Patty Murray and John Kerry. The third appointee is Max Baucus of Montana, a moderate who is the budget committee chair, but Baucus voted against the Bowles-Simpson committee's recommendations because he was worried about cuts to farm subsidies.

Obviously Reid does not want a plan to come out of the supercommittee unless Republicans allow significant tax increases, and since we can count on McConnell and Boehner to be at least as stubborn as Reid, we should get ready for no plan and then the automatic cuts. As Ezra Klein predicted:
Perhaps this deal signals the end of the need to actually reach an agreement, however. If the Joint Committee fails, the trigger begins cutting spending. If negotiations over taxes fail, the Bush tax cuts expire and revenues rise by $3.6 trillion. Neither scenario is anyone’s first choice on policy grounds. But you can get to both scenarios without Republicans explicitly conceding to higher taxes or Democrats explicitly conceding to entitlement cuts in the absence of higher taxes. Politically, that’s the lowest-common denominator, and that might mean it’s also the only deal the two parties can actually make.

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