With the Bush-era tax cuts set to automatically expire at the end of the year, mandated spending cuts looming over Washington, D.C., and major elections on the horizon, one could be forgiven for seeing nothing but partisan wrangling and congressional gridlock in the months ahead.
But U.S. Rep. Jim Himes of Greenwich, who represents most of Fairfield County, says that this is actually the perfect time to try and enact reforms to taxes and spending that will have a real impact on the deficit. And he says he believes the fiscal axes hanging over all of Washington’s heads with the mandated spending cuts and automatic tax increases set to go on Jan. 1, 2013, will actually spur his fellow Democrats and Republicans to work on a deal based around the bipartisan recommendations of the Simpson-Bowles Commission.
The commission, which was led by former Republican Senator Alan Simpson and Erskine Bowles, a former White House chief of staff for President Bill Clinton, issued a report in 2010 that called for tax increases on high earning Americans, defense spending cuts, as well as reforms to Medicare, Medicaid and Social Security. After not being acted upon initially, the recommendations have been turned into legislation in the Senate and Himes is optimistic that it in the coming months it will be brought to the floor for debate.
However, Himes added he does not see that happening before the November elections, which will not only have President Barack Obama on the ballot but many key senators and the entire House of Representatives, including Himes himself. That means if it is brought up at all this calendar year it will be by a “lame duck Congress” that will serve out the remainder of the term before a new Congress comes in, with potential new leadership no matter which party has the majority.
Lame duck sessions of Congress are not typically very productive but the 2010 Congress, after an election that saw Republicans win decisive victories across the country, actually passed several major pieces of legislation, and Himes says circumstances will force the end of this Congress to do the same. He says there won’t be a lot of time, but the work can begin on taxes and issues like “fair” Medicare reform, and then over the next four to five months, with the new Congress in office, the legislation can be finalized and brought to a vote.
“We will need for the environment to calm down after the election and by that time the threat of the automatic spending cuts and the expiration of the tax cuts will be there,” Himes said. “The Congress knows what it is going to have to do. Not a lot of people will admit this publicly, but Simpson-Bowles, plus or minus some negotiation, is the deal.”
The Simpson-Bowles plan came under heavy fire from both sides when it was first introduced, but Himes said the passage of time has only made it clearer to those in office that something has to be done. He said his Democratic colleagues have to realize there needs to be Medicare reform that is “equitable” and doesn’t place a bigger burden on seniors, and that Republicans have to realize that there will need to be increased revenues from citizens by closing loopholes and by increasing taxes on the wealthiest people, all of which is part of the plan. He added that his colleagues on both sides already know that but and have “come to accept it” but only in private with their re-elections looming in November.
Himes said there is a growing willingness from Republicans to come to the table, citing a freshman Republican congressman from Virginia who stood up at a recent conference for the bipartisan No Labels group and said that they know there will need to be increased revenues but that party leadership will need to “bless it” first.
“We’re going to need to get everyone on board and once they realize what will occur automatically, which are increased taxes on just about everybody and cuts that are dumb, is so awful, they know they will need to sign onto Simpson-Bowles,” Himes said.
Himes said that the cuts that are mandated, due to the 2011 so-called congressional “supercommittee” failing to reach a deal on deficit reduction, include “things the Republicans hate” including cuts to the Department of Defense. Plus if the Congress does not act then the tax cuts automatically expire and taxes will revert to the levels under President Bill Clinton, something Republicans have been dead set against. Himes said this will give Republicans incentive to do a deal and said it is vital that no one come up with quick fixes to undo the automatic cuts and expirations, so a more permanent deal can be reached.
“That’s how Congress weasels out of these terrible but important hammers,” Himes said.
Himes said that current Speaker of the House John Boehner has shown willingness to work with President Obama and Democrats on a deal but that he’s been “constrained by the Eric Cantor tea party wing of his party.” Cantor is thought by political observers to be more extreme than Boehner and it is possible, if the Republicans retain the majority in the House, after the fall elections that he might challenge him for speaker. But because the cuts and automatic tax increases “are so poisonous to Republicans” that it will put them in the “classic negotiating position” where they hate what’s going to happen so much, they have to reach a deal that “they will hate less.”
Democrats have had concerns about the reforms Simpson-Bowles calls for in Social Security and Medicare. Himes said the reforms would not affect current recipients at all, but would impact future recipients in ways like a “very slow” increase in the retirement age. He said this means the people who would deal with the changes would first have 20-30 years to plan for it.
Himes admits that Simpson-Bowles will not be an easy sell for either party and that there are parts he does not like, but it is a matter of it being better than the alternatives. Calling the plan “the right thing to do,” he said that the automatic $1.2 trillion over 10 years cuts in spending, which is split 50/50 between defense and non-defense, will be too deep and too arbitrary and that it will be better to have a more careful approach to make sure cuts are made in the right areas with a smart approach.
Himes was recently honored with the Concord Coalition’s 2012 Paul E. Tsongas Economic Patriot Award for his work on deficit reduction. The coalition, which is non-partisan, presented Himes with the award, named after late Democratic senator and presidential candidate, for voting for the Cooper-LaTourette budget earlier this year. That budget, which was soundly defeated in a full vote on the House floor, was modeled after the Simpson-Bowles recommendations and represented the only budget put forward by members of both parties. Himes’ office has trumpeted this support, noting that USA Today called Himes and the 37 other members of Congress that voted for it, “the brave 38.”
When asked why he supports Simpson-Bowles so vocally, as he nearly since it was introduced, Himes said the recommendations would not only cut the deficit, but stabilize the country’s debt for the long term “in a fair way.”
“One of the underlying principles of this report was that the poorest people in the country wouldn’t be asked to bear the burden of deficit reduction,” Himes said. “Simpson-Bowles is true to that. Its proposal for Social Security would actually send more money to the least well off seniors. It’s not perfect, but it’s a very fair starting point that calls on defense, calls on the wealthiest Americans to contribute, and then preserves not just the programs that help the poorest but the programs like investment in infrastructure and education and medical research. The best way to put this is that it is forward looking and balanced.”