There is no doubt about it: Americans are ready for the White House and Republican leaders to hammer out a deal to end a preposterous, nine-day-old government shutdown and save the country from the potential financial ruin of a first-ever default on U.S. debt.
For all the bitter recriminations and political posturing, polls indicate that even a divided electorate wonders why a solution should be so hard at this point.
For the umpteenth time this week, President Obama declared on Wednesday that he refuses to negotiate with congressional Republican leaders over spending, the debt ceiling or Obamacare under duress. Instead, the president said House Speaker John Boehner (R-OH) and his caucus should reopen the government and extend the Treasury’s borrowing authority beyond next week without asking for any concessions.
House Republicans, meanwhile, continued to pass rifle-shot measures to reopen portions of the government – but not others. Obama met with House Democrats Wednesday afternoon, but the closed-door conversation at the White House appeared to do little to break the public impasse. Senate Democrats, House Republicans and Senate Republicans will be asked to attend similar sessions in the coming days.
If Obama and Boehner are sincerely open to negotiations – but under the right circumstances – then there are obvious solutions at hand. Here are three possible approaches:
Pass a Stopgap Measure That’s Tied to Budget Talks. Republicans are demanding concessions before they approve a continuing resolution to end the government shutdown and raise the debt ceiling. But Obama says he won’t begin talks with a “gun to my head.”
One way to slice through this Gordian Knot is to pass a four-to-six-week stopgap measure – but tie it to holding budget negotiations. The National Review reported on Wednesday that GOP congressional leaders plan to bring a six-week debt ceiling extension to the floor to avoid default.
The president on Tuesday said Republicans could even specify which issues they want to discuss in the continuing resolution to end the shutdown. That was his answer to Boehner’s request that all he wanted was a “conversation.”
“They can attach some process to that [giving] them some certainty that in fact the things they're concerned about will be topics of negotiation, if my word's not good enough,” Obama said on Tuesday. “But I've told them I'm happy to talk about it. But if they want to specify all the items that they think need to be a topic of conversation, [I’m] happy to do it.”
This could be achieved through a “deeming” legislative process in which – under a special rule – the passage of the CR triggers the creation of the bargaining panel. In that way, Obama and Senate Majority Leader Harry Reid (D-NV) can legitimately say they didn’t sign off to a deal under duress, while Republicans can say they didn’t “surrender” to the Democrats.
Obama’s Tuesday statement contains the seeds of a potential deal – with a senior House Republican telling CNN that a four to six-week debt ceiling increase was an option.
But there is a catch. Obama emphasized he “will not eliminate any topic of conversation,” but a House GOP proposal to form a new bipartisan super committee would exclude tax increases from the negotiations. The White House plans to veto the House measure.
Also, the president tempered his outreach by adding that the talks about Obamacare would not produce the changes the GOP seeks.
“I won't let them gut a law that is going to make sure tens of millions of people actually get health care,” Obama said, “but I'm happy to talk about it."
Obama Bends on Obamacare. The president says there’s no way he would bow to GOP demands to delay, defund or dismantle his signature health care insurance law, but there are a number of provisions that could be waived or postponed without seriously undermining the law.
The most effective move would be to delay the individual mandate for one year. The Obama administration invited charges of hypocrisy when it delayed the employer mandate until 2015. Republicans argue it’s unfair to excuse businesses from providing health insurance but charge individuals a tax penalty for not carrying tax coverage.
There is a practical way out of this dilemma.
Obama says his goal is to offer millions of Americans access to subsidized health insurance. Boehner says his objection is about “fairness,” declaring, that, “We should not ask American families to comply with these onerous mandates, especially when big businesses have already been given exemptions.”
Here’s a solution: Keep the Obamacare health insurance exchanges open so that people can still buy coverage, but delay the tax penalty for one year, thus removing the mandate.
There are concerns that the tax penalty, which scales up over time, is too small at $95 next year to force Americans to purchase insurance. The penalty is expected to raise $5 billion in 2015, when people pay their taxes for 2014, according to CBO estimates.
Compared to the possible consequences of a shutdown coupled with a default, the loss of $5 billion in revenues two years from now is small potatoes for budgets that would total more than $7.3 trillion during that period.
With no penalty for not purchasing health insurance, but a requirement for insurers to accept anyone who wants insurance, some experts anticipate that the costs of insurance would increase as the healthy hang back from the system and the sick flood it. But the first-year penalty is so paltry, it’s unlikely to have much of an impact during the one-year hiatus of the “individual mandate.”
Bring Portman to the Rescue. Sen. Rob Portman (R-OH) just might save Boehner from having to make what the speaker called an “unconditional surrender.”
The former budget director for President George W. Bush is circulating his own broad compromise to restart the government and stop a default. Details about the plan are starting to surface and it’s a huge play, rather than a temporary stopgap designed to buy time.
House Budget Committee Paul Ryan (R-WI) is also cranking out ideas in terms of entitlement and tax reform. His op-ed in The Wall Street Journal said that Medicare premiums could be higher for wealthy seniors, forcing federal employees to contribute more to their retirement plans.
First off, in the Portman plan, Obama gets a year-long continuing resolution that preserves the existing sequestration spending levels. But it also incorporates about $600 billion in cuts primarily to entitlement programs such as Medicare, Medicaid and Social Security that come from Obama’s own budget proposal.
The measure would also require assurance that a system is in place to verify the incomes for Americans getting subsidies under Obamacare before funds are released, an anti-fraud measure initially proposed by Sen. Tom Coburn (R-OK) and Rep. Diane Black (R-TN). This move presumably would not gut Obamacare and could strengthen it, so it’s designed to overcome Democratic objections while allowing the GOP to appear tough.
Lastly, the bill would direct congressional committees to reform the tax code. This includes a lot of the big ticket items: entitlement cuts that Democrats can live with, a full year without another budget crisis, a face-saving Obamacare policy, and the dream of tax reform.
That means it will either become law, or—judging by rejection of the Bowles-Simpson deficit reduction plan a few years back—quickly end up on the scrap heap.