Inching closer to an easily-avoidable crisis

When President Obama hosted congressional leaders last Thursday for debt-reduction talks, he told participants they would reconvene mid-day Sunday. Obama encouraged the participants to dress casually because they were “going to be there a while.”

The thinking, for days, was that the negotiations would be advancing towards a resolution, and the leaders could start ironing out details during Sunday’s session. What’s actually transpired is the exact opposite.

The night before Sunday’s meeting, Speaker John Boehner (R-Ohio) was forced to concede that his own party refused to go along with his ambitious, and fairly comprehensive, $4 trillion goal. By the time participants convened yesterday, they talked for 75 minutes, made no meaningful progress at all, and left.

There’s ample evidence that, with the crisis point quickly approaching, congressional Republicans are actually getting worse.

A Republican official familiar with the negotiations said Mr. Boehner “would only discuss new revenues if they came from economic growth and tax reform instead of tax increases.” And he insisted on a “trigger” that would set off deep spending cuts and other measures if the tax changes were not implemented before the end of 2011.

Mr. Boehner and the White House, Democratic officials said, also disagreed over the scope of cuts to entitlement programs, with the speaker demanding deeper cuts in Medicare and Medicaid than the administration was willing to accept.

The Republicans’ line has been that they’re not only choosing to set the goal (trillions in savings), they’re also demanding 100% of what they want to reach that goal (spending cuts with no new revenue). What about the possibility of leaving tax rates intact and generating new revenue through scrapping tax expenditures? The GOP line, as of yesterday, is that this is unacceptable, too.

Republicans, led by Mr. Cantor, rejected proposals to close loopholes or other tax breaks for owners of corporate jets, oil and gas companies and hedge funds. They said these measures, which would have raised about $130 billion, amounted to tax increases.
The administration has also proposed limiting deductions for high wage-earners, which the White House says would raise $290 billion. But there is little support for that in Congress. And if there are no tax measures in the deal, the leaders say, they will not be able to corral enough Democratic votes to pass it.

In case it’s not obvious, let’s note two broader truths. The first is that Republicans don’t really give a damn about debt reduction. They care about taxes and shielding the wealthy from having to pay a little more. The parties, then, are talking past one another — Dems think they’re involved in a good-faith effort to reduce the budget shortfall with a sensible, balanced approach to bring the budget closer to balance. Republicans think they’re involved in an effort to cut spending — not because of the deficit, but because it’s what they like to do anyway — and protect tax giveaways.

It’s hard enough to reach an agreement when the parties pursue the same goal. In this process, Democrats and Republicans aren’t even having the same conversation.

The second is that Republicans, as is their new nature, simply can’t bring themselves to even consider compromise. Americans elected a Democratic president, a Democratic Senate, and a Republican House. Given these circumstances, GOP leaders are absolutely convinced that the only fair resolution is that Republicans get everything they want, and Dems simply go along. And if Dems balk, Republicans will crash the economy on purpose.

It’s nothing short of insane.

Talks will resume today, and are scheduled to continue, literally every day, until there’s an agreement.