Beutler argues that the GOP’s allergy to any sort of tax increases makes it difficult:
In a real way, this was Grover Norquist’s shutdown. And now, Norquistism is the main obstacle to preventing another shutdown in January.
The bill that reopened the government precipitates official budget negotiations. Democrats have been demanding a House-Senate budget conference for six months, but Republicans forestalled it, largely because of Norquistism. And in the aftermath of the shutdown GOP leaders are still squashing any discussion of revenues before contemplating the merits.
Does that mean the government will shut down again unless Republicans have a tax epiphany, and agree to close some tax loopholes for rich people? No. But it means that they have already closed off the easiest and most obvious path to avoiding one.
Ezra suggests that Democrats shelve tax increases, for now:
The core question for the American economy isn’t taxes. Or spending. It’s growth. That’s true even if all you’re worried about is the deficit. As Larry Summers wrote, the Congressional Budget Office’s numbers suggest that “an increase of just 0.2 percent in annual growth would entirely eliminate the projected long-term budget gap.” The budget debate, in other words, should be a growth debate. And Democrats’ top priority shouldn’t be higher taxes. It should be growth — and, to be sure, the distribution of that growth.
He wants relief from the fiscal pinch of sequestration. Chait expects this to be a heavy lift:
The Republican Party now embraces sequestration even while sometimes still assailing it as horrible policy. The real appeal to the GOP is that Obama doesn’t like it. As McConnell candidly says, “Keeping the BCA [Budget Control Act] levels is a huge success, and I know because Democrats hate it.” Aside from any policy details, Republicans really want to stick it to Obama. Keeping in place policies Obama hates makes them happy, irrespective of the content of those policies.
Cohn tries to imagine a deal that Republicans and Democrats might agree to:
Democrats once hoped to reach an agreement that would replace all of the sequestration cuts, which are supposed to last for ten years. But that would require the kind of grand bargain Republicans have rejected. That’s why the best hope is probably for a much narrower deal—one that replaces a year or two of sequester cuts, while putting some money into Democratic priorities like transportation infrastructure and maybe a token investment in the president’s pre-kindergarten proposal. Such a deal might also include new revenue, but only a small amount, perhaps as a byproduct of tax reform or some kind of clearly dedicated user fee. (In other words, some kind of tax designated for a specific purpose, in the same way a gas tax is dedicated to transportation.) In exchange, Democrats could agree to a set of “mandatory spending” changes that didn’t touch Medicare and Social Security benefits—say, cuts to farm subsidies or federal retirement programs, or changes in the way Medicare pays for services. Some of these proposals are already in Obama’s 2014 budget proposal. Both the White House and congressional Democrats could go for this kind of deal—depending, of course, on the precise mix of components.
My main concern with unwinding sequestration is that it removes the only serious leverage against defense spending, the critical part of future fiscal health that no one wants to talk about. But frankly, any failure to act on the big issue of entitlements makes me less interested in any future budget that breaks out of the sequester. Perhaps the deal means adopting chained CPI in return for current infrastructure investment. That both boosts growth now while restraining costs later. The Democratic left would hate it. Obama should ignore them. If we’re going to have a small bargain, an adjustment to the sequester, keeping the defense cuts, increasing infrastructure investment and giving some relief to future generations strikes me as doable.
The Dish 