The next deficit deal: There's a rough road ahead

[August 04, 2011]  WASHINGTON (AP) -- The special panel's goal is lofty: concoct a deal both parties will embrace to slash federal deficits by a mammoth $1.5 trillion or more over the next decade.

Yet from the moment House and Senate leaders appoint the 12 members until the 2012 elections, hurricane-force political pressures are going to make it tough to produce anything substantial.

All sides will fiercely defend core priorities, Republicans opposing tax increases and defense cuts and Democrats protecting benefits for Medicare, Social Security and Medicaid recipients. Those happen to be exactly where nonpartisan analysts say savings must occur for any serious deficit-cutting package to emerge.

The decisions -- at least the next big ones -- rest with the committee set up by the agreement that defused the debt-limit crisis this week.

Every choice will have implications for President Barack Obama's re-election, for Republican hopefuls jockeying to unseat him and for Democrats and Republicans struggling for control of the House and Senate.

If the special committee of lawmakers fails to produce a savings plan by Thanksgiving or if Congress rejects it by Christmas, this week's compromise debt limit accord between Obama and Congress will automatically trigger cuts of $1.2 trillion from much of the budget, with half from the military.

That would mean "dangerous across-the-board defense cuts that would do real damage to our security, our troops and their families and our ability to protect the nation," Defense Secretary Leon Panetta declared Wednesday.

Here's a map of the road ahead, based on interviews with two dozen lawmakers, aides and lobbyists:

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APPOINTING COMMITTEE MEMBERS

Within two weeks, Democratic and GOP leaders of the House and Senate will each name three lawmakers to form the new 12-member committee.

House Speaker John Boehner, R-Ohio, House Minority Leader Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., are sure to name members who will be unquestionably loyal to them and their party's interests.

The special committee will need approval by just seven members to send a package to Congress for a vote with no changes allowed. No leader can afford to appoint a wild card who might stray.

The leaders have another incentive to name loyalists who follow party orthodoxy: self-preservation. None wants to lose seats in the next election, or risk a rebellion by rank-and-file lawmakers that might cost them their leadership posts because a committee agreement abandons party priorities.

"People's political survivability might be at stake here, both for members and control of each chamber," said Robert Reischauer, president of the nonpartisan Urban Institute.

Appointees will probably have budget expertise. It could be risky to name legislators who were members of the Simpson-Bowles commission or the Senate's "Gang of Six," bipartisan groups that proposed budget plans that included higher taxes and benefit cuts, because they might embrace a compromise that party leaders oppose.

So far, names floated as possible Republican members include Sens. Jon Kyl of Arizona, the No. 2 GOP leader who is retiring after this term; Rob Portman of Ohio, White House budget chief under President George W. Bush; and Mike Johanns of Nebraska, a first-termer and former governor.

Other GOP possibilities include House Majority Leader Eric Cantor, R-Va., and House Budget Committee Chairman Paul Ryan, R-Wis.

Possibilities from the other party include Senate No. 2 Democratic leader Richard Durbin of Illinois and Senate Budget Committee Chairman Kent Conrad, D-N.D., who is not seeking re-election.

For fear of a committee populated by 12 white men, Pelosi seems likely to name appointees who reflect gender or racial diversity, Democrats say. Boehner might feel a need to appoint a member of the Republican Study Committee, an organization of House conservatives, or one of the 87 GOP freshmen.

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THE COMMITTEE'S WORK

No one contests that it will be hard to produce a package that is due a month before the start of a presidential and congressional election year and just two months before Iowa caucus voters have a say on the Republican presidential nominee.

Party leaders are already laying down markers.

On Tuesday, McConnell said on Fox News that the odds of the committee endorsing tax increases were "pretty low," adding, "I'm comfortable we aren't going to raise taxes coming out of this joint committee."

Reid expressed a different view.

"We will have no legislation that will come out of that joint committee unless revenues are part of the mix," he said on National Public Radio. "It's a fact of life."

A big bipartisan deal would doubtless be greeted with popular approval and both parties could claim credit for it. It would also be touted by Obama months before he faces voters for a second term.

But other incentives could complicate efforts to reach an agreement.

With the weak economy, the anti-incumbent mood of voters and Democrats defending 23 of the 33 Senate seats up for election next year, Republicans have an excellent chance of winning control of that chamber. A deal that lets Senate Democrats boast of an accomplishment might not help McConnell's chances of becoming majority leader.

Pelosi and Reid may not be helped by a deal in which Democrats agree to Medicare benefit cuts in exchange for tax increases. Many Democrats think the House-passed Republican budget, which completely reshapes Medicare, is a winning political issue for them that they don't want to surrender.

Boehner, whose command of the House is both fueled and threatened by anti-tax tea party lawmakers, has little incentive to bless a deal that raises taxes. But if an agreement includes Medicare cuts, he could be tempted to embrace it because it might neutralize that issue for Republicans.

Pushing the committee to produce an agreement are the $1.2 trillion in automatic budget cuts that will be triggered if the panel deadlocks or Congress rejects its work. Obama and congressional leaders made the automatic cuts truly unappealing to both parties, with half of the $1.2 trillion hitting the military -- anathema to Republicans -- and the other half slamming domestic programs popular with Democrats.

"I understand the nuclear option. It cuts both ways," said freshman Rep. Allen West, R-Fla., a tea partier, retired Army lieutenant colonel and member of the House Armed Services Committee.

Democrats hope the prospect of steep defense cuts will give them leverage in the special committee, forcing the GOP to consider what they have soundly rejected -- revenue from taxes.

"It puts us in a much better position than we were using the debt ceiling debates to get taxes into the equation," said Sen. Ben Cardin, D-Md.

Even so, many freshmen and tea party-backed lawmakers are less protective of the Pentagon than some of the more senior lawmakers in Congress.

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OUTSIDE PRESSURE

Outside groups are trying to influence the composition of the committee and its end product. Health care providers, labor unions, conservative and liberal groups and others are sure to intensify pressure on panel members as their work proceeds.

In one warning shot, a would-be tea party challenger to Sen. Olympia Snowe, R-Maine, sent an email to supporters chastising her for voting for the debt limit bill on Tuesday.

"Snowe betrayed us," wrote Scott D'Amboise.

The Aerospace Industries Association was already pressing for appointment of members of the congressional committees that oversee the military to serve on the special bipartisan panel.

Marion C. Blakey, president and CEO of the association, said spending cuts "would weaken the defense industrial base that is responsible for thousands of high-paying jobs and billions of dollars in exports."

Panetta, in a message to Defense Department employees, said the automatic cuts are "designed to be unpalatable to spur responsible, balanced deficit reduction and avoid misguided cuts to our security."

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THE ENDGAME

Should the special committee's work prove unsuccessful, the two parties will have all of 2012 to continue their battle.

The $1.2 trillion in automatically triggered budget cuts don't take effect until January 2013. That is exactly when broad tax cuts worth trillions of dollars, enacted under President George W. Bush, expire. Those two events could push lawmakers to strike a deal that marries spending reductions with the renewal of some of those tax cuts.

A complete deadlock that leaves the spending cuts in place and fails to renew Bush's tax cuts would save the government huge sums.

"If everybody does nothing, it could have a very good result for the budget," said Robert Bixby, executive director of the nonpartisan Concord Coalition, which advocates a balanced budget.

Another possibility for 2012: If the automatic spending cuts have been triggered, Congress could restore the money in an irresistible election-year vote to beef up Pentagon spending.

GOP presidential candidates stand ready to criticize Obama should a deal fall through and automatic budget cuts whack Pentagon spending.

That would give the hopefuls at least one issue for 2012 -- Obama as commander in chief oversaw steep cuts in defense spending while waging war in Afghanistan and possibly keeping troops in Iraq.

Meanwhile, both parties will be focused on influencing the November elections.

"All this is going to be litigated in the next election, and that's where I think the final verdict will be rendered," said Sen. John Cornyn, R-Texas.

[Associated Press; By DONNA CASSATA and ALAN FRAM]

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