The Biden group of debt negotiations resumed on Tuesday with the fourth meeting of the bipartisan group of lawmakers chaired by Vice President Biden. The talks continued to focus on forging a debt reduction deal that will facilitate an increase in the statutory debt limit.
The negotiators are looking for $1 trillion in spending cuts as a “down payment” towards larger debt reduction. So far the group has only agreed to between $150-$200 billion in cuts. CRFB has identified between $1-$2.5 trillion in common-ground deficit savings through an analysis of recent budget plans from both parties. Much of the discussion reportedly focused on finding savings in healthcare. CRFB offered some ideas for health care reform that can reduce the debt here.
The group will meet again on Thursday, where they are poised to discuss “trigger” mechanisms to get the rest of the $4 trillion in deficit reduction that is the goal of many. Triggers can play a major role in meeting debt reduction goals, though they are no substitute for specific debt reduction policies. The Peterson-Pew Commission on Budget Reform (a project of CRFB) has been a leader in formulating debt targets and triggers that would effectively complement strong fiscal policies in significantly reducing the national debt. The Commission recently provided ideas for making targets and triggers work as part of a fiscal plan.
Revenues will be a key sticking point in the negotiations. Biden says that taxes must be on the table, while House Majority Leader Eric Cantor (R-VA), one of the negotiators, says that is not going to happen. Eliminating or reducing tax expenditures, which are really just spending through the tax code, are an area of possible compromise. See here, here, and here for how tax expenditure reform can simplify the dysfunctional tax code while broadening the tax base so that tax rates can be lowered with more revenue available to reduce the debt.
As CRFB has pointed out, the debt ceiling will have to be raised because the economic consequences would be disastrous otherwise. However, refusing to confront the mounting debt will also have grave economic effects, only more drawn out. The ideas, and agreement in many cases, are there; what is needed now is the political will among lawmakers to make the tough choices together in a bipartisan manner.