Try, try again: Senate 'Gang of Six' hatching plan on US debt reduction

Congress punted last year on a plan for major US deficit and debt reduction. But the bipartisan 'Gang of Six' senators is back at it, crafting a blueprint they say will be ready for consideration even before Election 2012.

Even with Congress at a nadir of bitter partisanship, the so-called Gang of Six, a bipartisan group of senators who came together last year to try to devise a way to strike $4 trillion out of federal spending in the coming decade, is still quietly at work.

The group expects to have a debt-slashing plan of the $4 trillion variety ready well before the November election, in the event that spillover from Europe’s financial strains or changes in the Republican presidential race present an opportune moment to present it for consideration.

Many pundits, not to mention members of Congress, pooh-pooh the idea that such a sweeping legislative achievement can be achieved during a tightly contested election and by a thoroughly divided Congress. But what the "gang" does have going for it is a need, perceived by many lawmakers, for Congress to produce something substantive to take home to constituents before the November election.

“This debt debacle has been a proxy for whether our institutions work,” said Sen. Mark Warner (D) of Virginia, one of the Gang of Six, this week. “We need to believe again that our governing institutions are up to putting country ahead of party. This is the issue that I think can make that happen.” 

Why now?

The conventional wisdom is that the Senate, paralyzed by polarization and election-year politics, will be a vortex from which no legislation can escape until the November elections. Then, with the election outcome in the rearview mirror, Congress will have direction to move on a thicket of tough issues, which Senator Warner laid out Thursday during a talk at the Carnegie Endowment for International Peace.

First up would be the expiring Bush tax cuts (worth $5 trillion over 10 years) and the payroll tax holiday (about $100 billion per year). Capital gains and dividend tax rates will also rise if Congress doesn't act. Then, lawmakers must come to terms with the budget-slashing “sequester” – which would hit both the defense budget and discretionary programs to the tune of $1.2 trillion over 10 years – agreed to as a part of the deal last summer that raised the national debt ceiling.

And that’s without the first order of business for the president: a need to raise the debt ceiling another $3 trillion, by some estimates.

“This crash is going to happen at the end of the year, and coming out of a campaign where you’ve had two presidential candidates who’ve spent the whole campaign calling each other names,” Warner said. "The idea that immediately after, everybody’s going to say, ‘Oh gosh, let’s come together and find common ground and fix this’ I think is not a bet that we as a country should take.”

None of that is news. But a bold debt-reduction plan might have more support on Capitol Hill than many think, as some senators, in particular, chafe at the label of a "do nothing" Congress.

“There’s a rank-and-file rebellion brewing here” over the Senate's broad ineffectiveness, said Sen. Lindsay Graham (R) of South Carolina on Wednesday. “Most people come to the Senate, work hard to get here, they’ve done things in their lives of accomplishment, and I think a lot of us are getting tired of sitting around and looking at each other.... Bowles-Simpson, Gang of Six – there’s a good road map to follow if we choose to follow it.”  

On the House side, Democratic whip Steny Hoyer sounded a chord similar to Warner’s in a speech Monday at the left-leaning policy group Third Way.

“There is never a time when the next election is not looming before us,” Representative Hoyer said. “In fact, [making a debt deal] will only get more difficult as time passes and our debt grows. That’s one reason why I will keep pushing to reach an agreement before November, and why everyone concerned about our debt ought to do so as well.”

There's plenty of skepticism about all this, of course.

At a recent breakfast sponsored by The Christian Science Monitor, House Budget Committee Chairman Paul Ryan (R) of Wisconsin told reporters that, though a “handful” of Democrats might strike a compromising tone on fiscal issues, he is not sanguine about the prospects of a "go big" deal before the election.

“What we are trying to do is advance the idea, plant the seeds to reap a bipartisan solution after this election, because we know it’s not going to happen before,” he said.

Warner concedes that reaching a large-scale debt deal will be tough pre-election but suggests that two external shocks could improve its prospects. First, the ugly way: A deterioration in Europe’s financial situation causes interest rates to rise and US economic projections to become more dire. This begins to shake the American economy, forcing the United States to confront its long-term fiscal problems sooner than it had expected to.

The second opportunity is more benign: The GOP settles on its presidential candidate.

“It’s really hard for our Republican colleagues right now, until there is a Republican nominee, to do something too bold,” Warner said.

If auspicious circumstances do arise, what are proponents of a “go big” debt-reduction deal doing to ensure they can seize the moment?

Warner and his colleagues in the Gang of Six are putting the debt-reducing plan produced by the Simpson-Bowles commission into legislative language (some 800 pages and counting, by Warner’s estimate). That legislation should be in final form within the next six to eight weeks, Warner said. The bipartisan commission, chartered by President Obama, offered a widely commended path to financial balance but has yet to be actually put down in legislative form.

In addition, Warner plans to spend some of his congressional recesses taking trips around the country, alongside Republican colleagues, to talk up the case for a big debt-reduction plan. Warner joined former House member and current GOP fundraising rainmaker Vin Weber in Boston during the last recess for several events. He plans to travel to Nashville, Tenn., on a similar trip during the next break.

Even if neither of Warner’s scenarios comes to pass, he says that putting the issue in front of the Senate and educating the American people about the issues will pay dividends whenever the debt fight again takes the national spotlight.

“We can take the first round of arrows,” Warner said, speaking of the Senate. “Then the president and some of the House leadership can come in and say, ‘Well this isn’t perfect, but at least it gives us a starting point.' We have to take the arrows first, and, well, you know, that’s what I was hired to do.”