Standard & Poor's downgrade of U.S. debt last Friday reflected the agency's lack of confidence in the ability of lawmakers to work together to address the yawning federal deficit.
Whether the special committee created by last week's legislation to raise the debt ceiling will be able to achieve substantial deficit reduction depends in large part on who is named to the panel. A popular Washington aphorism, often repeated because of its essential truth, states that ‘personnel is policy.'
House and Senate leaders have until Aug. 16 to make their choices. The committee has until Nov. 23 to come up with a proposal, and the House and Senate must vote on the package by Dec. 23. A simple majority is needed in each chamber for approval and no amendments will be allowed.
Experts assert that the bicameral, bipartisan 12-person committee must consider changes both to taxes and entitlements to make fundamental changes in the deficit trajectory. In order to do so, it will have to be filled with members who are willing to break with party orthodoxy.
Republicans would have to consider tax increases. Democrats would have to swallow cuts to entitlement programs like Medicare, Medicaid and
Social Security.
Under one scenario, House and Senate leaders would appoint to the committee the leaders and ranking members of the committees with jurisdiction over taxes and spending.
In the Senate, this approach played out in the selection of Sen. Max Baucus, D-Mont., chairman of the Finance Committee, who was tapped by Senate Majority Leader Harry Reid, D-Nev., late Tuesday afternoon for one of the super committee seats.
Mr. Baucus might be open to a so-called “grand bargain,” if he brings to the table the same kind of expansive thinking that he evinced during the health care debate a couple years ago, where he indicated a desire to remake the medical system.
The other two Democrats selected for the committee are Sen. Patty Murray, D-Wash., a member of Senate leadership as well as the Budget Committee, and Sen. John Kerry, D-Mass., chairman of the Senate Foreign Relations Committee.
Mr. Reid made Ms. Murray co-chair of the special deficit committee, a move that is drawing some skepticism from Republicans because she chairs the Senate Democratic campaign organization.
Mr. Reid, however, asserts that the Senate Democrats will work well across the aisle.
"I have appointed three senators who each possess an expertise in budget matters, a commitment to a balanced approach and a track record of forging bipartisan consensus," Mr. Reid said in a statement.
Mr. Baucus' Republican counterpart on the Senate Finance Committee, Sen. Orrin Hatch, R-Utah, might be chosen as a Republican member of the committee.
Mr. Hatch voted against the debt ceiling bill, which provided for $917 billion in spending cuts over the next 10, years and charged the special committee with finding up to $1.5 trillion more over the same period. He would come to the special committee with skepticism about the steps Congress has taken so far in debt reduction. He also is facing a challenge from the Tea Party in his re-election bid, which might make him wary of tax-policy changes.
If one or more members of the so-called Gang of Six is appointed to the special committee, chances will increase that it will take a big-picture approach. In the latter stages of negotiations over the debt ceiling bill, the Gang offered a proposal that would have provided about $1 trillion in revenue. It would have come from an overhaul of the tax system to reduce individual rates by eliminating or curtailing tax deductions and deferrals like those for retirement savings.
Mr. Reid passed over the Gang of Six Democrats — Sens. Richard Durbin, D-Ill., Sen. Kent Conrad, D-N.D., chairman of the Budget Committee, and Sen. Mark Warner, D-Va. — in making his appointments.
The Republicans from the Gang — Sen. Saxby Chambliss, R-Ga., Sen. Tom Coburn, R-Okla., and Sen. Michael Crapo, R-Idaho — are not likely to be selected.
Another wildcard potential appointee is freshman Sen. Rob Portman, R-Ohio. Mr. Portman, a former director of the Office of Management and Budget in the Bush administration, has a reputation for being both thoughtful and an expert on deficit issues.
House members on the select committee will probably take party positions.
Rep. Paul Ryan, R-Wisc., chairman of the Budget Committee, indicated over the weekend that the panel is likely only to make incremental progress in reducing the deficit, downplaying the notion that any kind of “grand bargain” can be worked out. Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, has said that the special committee should not be the venue for major tax reform.
If the House majority leader, Rep. Eric Cantor, R-Va., is appointed to the committee, he will be adamant in preventing his side from giving in on taxes.
“I firmly believe we can find bipartisan agreement on savings from mandatory programs that can be agreed to without tax increases,” Mr. Cantor wrote in a memo to his House GOP colleagues yesterday. “I believe this is what we must demand from the Joint Committee as it begins its work.”
Mr. Cantor will receive equally strong pushback from Democrats who want to protect those mandatory programs, if members such as Rep. James Clyburn, D-S.C., Rep. Chris Van Hollen, D-Md., Rep. Xavier Becerra, D-Calif., or Rep. Sander Levin, D-Mich., are chosen for the committee.
Short of a pummeling from constituents during the August recess that knocks everyone in Washington off the party line, most observations see the status quo emanating from the special committee.
“The [party] leaders are going to make sure the members they choose are not of the type who are going to go off and freelance,” said John Stanton, senior legislative partner at Hogan Lovells U.S. LLP.
