WASHINGTON – Maryland Democratic Congressman Chris Van Hollen is confident that Congress can avoid falling off the “fiscal cliff” of mandatory federal spending cuts come January, but a comprehensive budget solution may still be out of reach.
“I believe that there is a very decent chance that we can come up with a plan to replace the sequester for six months while we negotiate a longer term solution,” Van Hollen said, adding that he would prefer a long-term deal.
The House Budget Committee ranking member told the World Affairs Councils of America on Thursday that, while he was encouraged by House Speaker John Boehner’s call for a balanced approach of increasing tax revenue and cutting spending, Boehner’s comments could be interpreted to mean different things and might not indicate that he is ready to compromise with Democrats.
“If what he is saying is that he’s serious about additional revenue being part of a deficit reduction plan, then there may be an opportunity forward, but if what he is saying is what he’s said in the past, which is that somehow tax breaks for wealthy people can create economic growth without reducing the deficit, then we’re just right back where we started,” Van Hollen said later.
The fiscal cliff is a combination of automatic budget cuts and changes to the tax code that will go into effect in January 2013 if Congress cannot agree on a budget. The fiscal cliff, also called “sequestration,” was introduced as part of the 2011 Budget Control Act and was designed to be so unpalatable to both Republicans and Democrats by evenly slashing defense and domestic spending that it would force the parties to an agreement.
The battle between tax revenues and spending cuts is an old, ongoing struggle, but Sen. Mark Warner, D-Va., who also spoke to the councils, said he thought Congress could reach an agreement this time because the consequences of sequestration were so dire. Additionally, increased pressure from businesses and the Committee for a Responsible Federal Budget could spur on a decision.
However, Warner said that a quick-fix was necessary to reach a long-term agreement.
“My hope is that we will be able to make enough of a down payment to avoid the sequester cuts,” he said, adding, “give us some time to do tax reforms and entitlement reforms then set up, as a consequence if we fail, something we can actually live with.”
Some Republicans are equally unsure about Congress’ ability to fully resolve the issue, despite what could be considered a post-election olive branch from Boehner.
“There’ll be no permanent solution to sequestration. I really don’t hold much faith in Congress solving the sequestration issue before January,” said Andy Harris, R-Cockeysville, in a separate interview.
What makes a long-term agreement so difficult is that, no matter how the budget is balanced, it will require both Democrats and Republicans to go back on campaign promises, said Rudolph Penner, director of the Congressional Budget Office from 1983 to 1987 and Urban Institute Fellow.
“The tragedy of the campaign was that it did not alert voters to the fact that they are going to have to give up things that they think they have been promised. If Romney had won, he would have had to break promises, most notably the promise of no tax increase. Given that Obama has won, fixing the budget would very probably force him to abandon his promise not to raise middle-class taxes,” Penner said.
Obama might be willing to compromise some of his campaign promises because he will not be up for election again, Penner speculated, but opposition from Democrats in Congress makes compromise unlikely.
Meanwhile, House Republicans are not likely to make lasting compromises because they “think that they received a mandate as big as Obama’s.”
The political inability to compromise makes a short-term plan the most likely outcome, unless a financial collapse forces a lasting deal, Penner said. The lack of progress on the deficit might hasten that reality but Southern Europe’s economic crisis would probably make the U.S. look like a safe investment in comparison, which would stave off such a scenario.
In the absence of a complete financial meltdown, Congress will have to reconcile its campaign promises with the reality of the budget.
Van Hollen and Warner both acknowledge that it will take a bipartisan effort to reach a solution.
Van Hollen said he saw promise in previous bipartisan, revenue-and-spending-focused efforts, but he was aware of how difficult it will be to reconcile the different visions for America presented by Democrats and Republicans during the campaign. Promises regarding taxes and public benefits will not reconcile easily.
“There is not a whole lot of common ground on these issues,” he said. “Compromise means accepting some things that you don’t like. Both sides.”
Capital News Service reporter Carl Straumsheim contributed to this report.