In a bipartisan op-ed in the Chicago Tribune, Reps. Robert Dold (R-IL) and Daniel Lupinski (D-IL) endorse a two-part process that avoids the fiscal cliff and sets up a process for Congress to enact a fiscal plan next year. Arguing that the paths of either going off the cliff or avoiding the cliff without offsets are irresponsible, they see the enactment of a plan along the lines of the major bipartisan plans as the most viable option.
At this point in the year, it is likely too difficult to come to an agreement on specific reforms to both taxes and entitlements before the end of the year. Thus, they suggest the following process:
The first part would be an elimination of at least part of the "cliff" taxes and cuts, facilitated by making a significant down payment on deficit reduction that includes immediate spending cuts and new revenue. There are a number of options on the table that have already been spelled out in various debt-reduction commission reports, the discussions that took place last summer between the Obama administration and House Republicans, and in bipartisan legislation.
The second part would be to set up a process for early 2013 that will mandate broader changes to the tax code and entitlement programs. Congress can do this by requiring its committees to produce by a certain date legislation that lengthens the life and sustainability of entitlement programs and reforms the tax code to boost economic growth and bring in new revenue. Rather than rush these changes into fruition before the end of the year, it would be best to achieve these results by going through the legislative process and the appropriate congressional committees.
To encourage Congress to complete this second part, there would have to be a trigger in place to assure that specific debt cuts would be made if Congress failed to produce the debt-reduction legislation. Last summer we put in place the sequestration process — the across-the-board cuts — to encourage the supercommittee to succeed. Unfortunately, the committee did fail. But today the sequestration trigger is having the desired effect of forcing leaders back to the bargaining table.
Readers will recognize this process as being very similar to one we wrote about in a paper released on Monday. The process ensures that fundamental reforms can be undertaken while getting specific savings and avoiding the fiscal cliff upfront. They also agree with us that savings should be sufficient to put debt on a clear downward path as a percent of GDP; specifically, they mention $2.8 trillion of additional deficit reduction, yielding debt of 69 percent in ten years.
Lawmakers who want to "Go Big" seem to recognize that a two-part framework may be the best way to get a comprehensive deal. We hope that the negotiators can figure out how to make it happen.