'Fiscal cliff': Is Washington missing its chance to 'go big'?

President Obama and Congress are preparing to have another go at a deal on the fiscal cliff, but more and more it's looking like an opportunity for something grand to be wasted.

The “fiscal cliff” was supposed to offer Washington the chance to “go big,” to take on the nation’s federal debt and deficit situation in a serious way.

Instead, Congress and President Obama look as if they’re going to go small – and that’s if they get anything done at all before 2013.

The current negotiations are a “horrible waste” of a great opportunity to fix America’s fiscal trajectory, says Rep. Steve LaTourette (R) of Ohio, who is retiring.

“The opportunity is there,” he says.

But Washington hasn’t seized it.

First, there’s the immediate state of negotiations on the fiscal cliff that make any serious deal between Wednesday and the new year a heavy lift. With only five days left before more than $600 billion in higher taxes and lower government spending are scheduled to hit the economy, Washington’s power players aren’t even in the same place, much less in the negotiating game.

House Speaker John Boehner (R) of Ohio sent his troops home indefinitely after his fallback fiscal cliff legislation – a tactical maneuver stemming from his negotiations with the White House – couldn’t muster enough support from House conservatives last week.

Mr. Obama is returning to the White House late Wednesday evening from his vacation in Hawaii, and the Democrat-led Senate will be back to work on Thursday.

Before leaving town last week, the president asked congressional leaders to consider not the sweeping “grand bargain” on the nation’s debt that he had sought, but a far less ambitious package. Principally, one that would extend the Bush-era tax cuts for middle-class Americans, allow longer unemployment insurance for the long-term jobless, and that would, nebulously, lay “the groundwork for further work on both growth and deficit reduction.”

“That's an achievable goal,” the president said just a few hours before jetting off to Hawaii. “That can get done in 10 days.”

But even that modest target may be a long shot.

Stan Collender, a former House Budget Committee staffer, thinks there’s a 90 percent chance the political class turns up no accord with the current state of affairs.

“Even though it will be one of the worst possible outcomes economically, it's hard to argue with the procedural simplicity of doing nothing, because nothing would have to be debated, passed in the House and Senate, compromised, or signed by the president,” Mr. Collender writes. “No votes, caucus meetings, press conferences or negotiating sessions.”

Yet even the biggest deal Washington attempted to accomplish was on the small side of the $4 trillion to $6 trillion in deficit reduction over the next decade that independent economists and the president’s own debt and deficit commission have argued is necessary to fix the nation’s financial issues.

At most, Mr. Boehner and Obama have worked around a deal offering roughly $2.4 trillion in debt reduction, almost evenly split between higher tax revenue and cuts to government spending and entitlement programs. (By counting the $1 trillion in budget cuts agreed to last summer as part of the debt-ceiling deal and a handful of Washington budget gimmicks, the total deficit reduction could rise to around $4 trillion.)

At a press conference last week, Boehner noted that a deal of that size was along the lines of the smallest possible accord he had discussed with the Obama administration at the outset of their current talks.

“‘Why should we be attempting to do the minimum credible plan?’” Boehner said he told White House negotiators at their first postelection meeting. “We have a very serious spending problem that needs to be addressed.”

That feeling of inadequacy, that Washington let a golden opportunity slip through its fingers, is evident on both sides of the aisle on Capitol Hill.

Lawmakers see problems in the way the president and the speaker discuss targets for savings without specifying many of the policies or programs they would alter to get there.

“I think this idea of just plucking a number out of the air and saying ‘This is what we’re going to talk about,’ misses the point,” says Sen. Ron Wyden (D) of Oregon, a leading Senate health policy wonk. “The central question is ‘What are the policies that undergird the number?’ ”

At best, members with an intense interest in fiscal issues say, the biggest deal the speaker and the president have discussed is a good start.

“It’s not as much as I would hope for,” said Sen. Kent Conrad (D) of North Dakota, who is leaving the chamber at year’s end, “but it’s the right direction and it would be a significant step forward if we could get this put in place.”

But as the fiscal cliff talks have dragged on, the interest lawmakers have in getting to a big deal – the one that many of them said would be the best way forward at the beginning of the process – appears to have waned with the year.

Representative LaTourette of Ohio said last week that he has talked about the Simpson-Bowles budget framework, the bipartisan debt plan that emerged from the president’s debt commission in 2011, in every meeting of the House GOP conference since that time.

That was until last week, when he was told he needed “to quit talking about it” because he was starting to sound like Rep. Frank Lucas (R) of Oklahoma, the agriculture committee chairman who has mounted a constant but quixotic campaign to pass a farm bill this year.

“So I’m supposed to shut up,” LaTourette says.