Deficit ‘super committee’ may put off decisions

With time and compromise slipping out of reach, the congressional “super committee” may punt its toughest deficit decisions to next year rather than strike a deal that would enrage both parties’ political bases heading into the 2012 election.

The Joint Select Committee on Deficit Reduction has until Nov. 23 to agree to a package that would reduce deficits by $1.5 trillion over the next decade.

Achieving that goal would require painful compromise — both parties would have to give up political weapons they have hoped to wield over the next year. But failure could roil the financial markets as the holiday shopping season begins and further trash the already record-low approval ratings for Congress.

In an effort to avoid stark failure, a fallback plan is emerging that would push tough decisions on taxes to next year, perhaps into a lame-duck session after the election, according to officials familiar with the panel’s discussions.

Under this scenario, the two sides would agree now to a level of revenue from new taxes. They would direct the congressional tax-writing committees to revamp the tax code with fixed dates and goals. The object would be to generate new revenue while lowering corporate rates and keeping the top individual bracket no higher than the current 35%.

The move would allow the two sides to reach the outlines of the deal now, while deferring the most difficult issues until both see who wins the 2012 election. Currently, election politics makes an agreement difficult — each side has used the budget stalemate as a rallying cry and each believes it stands a chance of winning next November and thereby being able to strike a better deal.

If voters deliver a clear verdict in November, Congress might be in a better position to come to terms.

“By kicking it into next year you’re basically saying you’re going to have this litigated in the next election,” said R. Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce.

Even a limited deal,

however, as it is being envisioned by those close to the secretive panel, would require substantial political give on the tax and spending issues that have come to define the modern political parties.

Democrats would have to allow sizable cuts to Medicare, Medicaid and other cherished domestic programs, and Republicans would need to loosen their signature anti-tax stance. Any discussion of an overall increase in revenues would probably violate the “no new taxes” pledge that most Republican members of Congress have signed, although a deal might be able to fuzz up the line enough that Republicans would not have to acknowledge having done so.

In proposals that have been exchanged so far, Democrats offered a package that would be made up of equal parts spending cuts and new tax revenues — but would push the tax component to next year.

Under that plan, a new set of “triggers” would be put in place that would be designed to automatically force tax-law changes if Congress failed to act.

No changes in Medicare or other entitlement programs would take effect until the tax changes were adopted.

The proposal was rejected by Republicans, who said the Democrats’ insistence on $1 trillion in new revenue was a level they could not accept. They also said the proposed triggers would not be strong enough incentive to reach a deal. The GOP’s own proposal offered $250 billion in new tax revenues, along with lower rates.

A deal presumably would have to fall between those two amounts.

The framework under discussion resembles one that President Obama and House Speaker John A. Boehner negotiated during the summer debt-ceiling debate as a way around the impasse over taxes and spending.

They, too, got stuck on the trigger mechanism — Democrats wanted to force automatic tax hikes and Republicans wanted the repeal of Obama’s healthcare law. Boehner has said the failure to reach a big deficit deal with Obama is his biggest regret since becoming speaker.

Just as in the summer, getting to yes will require substantial give — particularly on the ratio of taxes to spending cuts — that could prove out of reach in the current political climate.

Some Republican leaders believe the White House would prefer to see the committee fail so that Obama could continue to run against a “do-nothing Congress.”

“It does raise your suspicion,” said Sen. Mitch McConnell of Kentucky, the Republican leader. “If the joint committee succeeds, it steps on the story line that they’ve been peddling, which is that you can’t do anything with the Republicans in Congress.”

Democrats have their own suspicions — that Republicans do not want any action that might seem to be an Obama success.

A compromise would assuredly result in an uproar on the political left and right, signs of which have already emerged. AARP is running ads warning lawmakers not to dare cut Medicare or Social Security. Top conservatives have made it clear that compromise on new taxes would be politically unforgivable.

Alienating so many important constituencies just as the 2012 campaign season is underway would be a tall order, even if the result could be followed by a grand political bargain.

But with time running short, many in Congress are loath to walk away from the possibility of a history-making achievement. Never before, experts say, has one group of lawmakers been given as much power as the super committee wields. Any proposal the committee members agree to has a guarantee of an up or down vote in both houses of Congress, bypassing the Senate’s ability to filibuster.

“At this point it’s in our hands on Capitol Hill,” said Sen. Richard J. Durbin (D-Ill.). “We have this committee with extraordinary power and opportunity, and I hope they use it.”

lisa.mascaro@latimes.com