The Bargain-Rate Grand Bargain

by John Lawrence

We had the Square Deal, the Fair Deal, the New Deal, and now we have the Budget Deal (December 2013 version). It isn’t likely to stick in the historical lexicon as long as the earlier policies, but it is significant, and here’s why. 

The agreement reached by the respective Budget Committee chairs – Rep. Paul Ryan and Sen. Patty Murray – demonstrates that when necessary, political leaders figure out a way to avoid calamitous results.  That is not to be confused with good governance, but it also illustrates that the mournful hand-wringing about “stalemate” and a failed political system is less than accurate.

The bargain-rate Grand Bargain makes a dent in the deficit and staves off cuts looming because of sequestration.  Perhaps most importantly, the plan obviates yet another nail-biting drama over a government shutdown early in 2014 which, being an election year, is a dangerous time to be provoking nail-biting dramas. 

While the Ryan-Murray plan combines about $85 billion in spending cuts and non-rate revenue raisers, it is not without controversy.  New federal workers will have to pay more for their pension benefits, which reduces their disposable income, and military retirees under the age of 62 will receive lower COLAs which ill impact their personal budgets.  Trimming benefits and establishing a precedent for restricting COLA growth sounds a lot like warming up for the Chained CPI reform President Obama and some Democratic leaders have embraced for Social Security (a change I argued earlier this year should be strongly considered in the context of a comprehensive budget agreement, which this is not).

Expect some Democrats to approach the Ryan-Murray deal warily, especially House Democrats who undoubtedly will be called upon to supply crucial votes Boehner-Cantor-Ryan can’t drum up on their side of the aisle.   Their willingness to provide those votes might be tempered by the continued refusal of House Republicans to agree to extend Unemployment Benefits which are scheduled to expire. 

Certainly there are good points to this plan.  It will allow a restoration of some of the cuts sequestration imposed on high-priority Democratic programs like Head Start and medical research.  And it retains the balance between military and non-military spending that many considered a silver lining in the sequestration plan.

True, it only provides two years of sequestration relief, and it ignores the dual 800 pound gorillas in the room: tax and entitlement reform.  But the savings attributable to the 2011 deal, combined with the cuts mandated by sequestration and the repeal of the Bush upper income tax cut last January, have combined to save trillions already, diminishing the sense of urgency that was driving the Grand Bargain a year and a half ago.

What this budget agreement demonstrates is that when the pain of sequestration bites too deeply, legislators will invent an alternative that relieves the pressure, even if it lacks enough heft to carry bigger policy changes.  And without a big package, it is probably wishful thinking to believe serious tax or entitlement reform is likely to occur anytime soon.

The agreement also demonstrates the intention of the increasingly unamused business community to send a signal to Republican leaders to stand up to Tea Partiers who are merrily fomenting unshirted chaos.  Various traditional Republican business groups have been promising to weigh in during GOP primaries to promote more centrist candidates, and did so successfully in a key Alabama special election last month.  I would bet dollars to donuts that business leaders have made clear to Boehner and company that the monkey business on shutdowns, debt ceilings and massive defense cuts has to end, even if that means collaborating with Democrats. Baby steps toward bipartisanship? 

In fact, throughout the 112th Congress, Democrats reliably supplied votes for a series of Continuing Resolutions and other urgent legislation that Tea Party activists refused to support, leaving GOP leaders short.  Often, Leader Nancy Pelosi and other Democrats were called upon to supply votes to prevent shutdowns and other crises even when they had played no role in developing the legislation and had grave doubts about what they were asking their members to vote for.  Don’t expect Democratic House leaders to rush to agree to anything they haven’t been privy to negotiating.

Some Democrats are understandably wary that supporting this deal will ensure malicious ads and hit pieces from local Republicans and national smear groups accusing them of cutting retiree or veterans benefits, for example.  As is always the case, any early Democratic vote for the bill frees another Republican to climb up on a white horse to denounce the deal, for whatever reason suits him or her.  Democrats will be wise to withhold their support and let Speaker Boehner wring every possible vote out of his Conference before riding to the rescue yet again. 

And read the fine print.