Ryan budget could stymie Senate’s ‘Gang of Six’ on deficit bargain

House Budget Committee Chairman Paul Ryan’s 2012 budget resolution, set to pass the House this week, may kill closed-door bipartisan negotiations in the Senate over a grand deficit bargain.

The Senate Gang of Six has been meeting more frequently lately and Senate Budget Committee Chairman Kent Conrad (D-N.D.) delayed producing a Senate counterpart to Ryan’s budget resolution to accommodate the talks.

To get Democrats’ support, the Gang of Six is contemplating tax increases. But new taxes are absent from the Ryan budget.

{mosads}Budget watchers are debating whether the Ryan budget is a line in the sand that signals the House will have no part of a bipartisan compromise, or an opening bid in future talks with supporters of the Gang of Six. 

Ryan, a Wisconsin Republican, served on President Obama’s debt commission and voted against its plan in December because it raised taxes and did not fundamentally transform Medicare.

Former White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R-Wyo.) developed a plan as co-chairmen of that commission that also has deep spending cuts and entitlement reform in addition to tax reform that raised revenue while lowering rates.

In contrast, Ryan’s budget resolution cuts $5.8 trillion in spending over 10 years and transforms Medicare in order to balance the budget by 2040 without raising taxes.

Grover Norquist, the president of Americans for Tax Reform, said in an interview that the Ryan plan “underscores” the fact that the House will never pass a bill based on the president’s debt commission report, which did not get enough votes to win the commission’s endorsement.

“Republicans in the Gang of Six had the mistaken belief, not completely without reasoning, that you couldn’t get $4 trillion in deficit cuts only by cutting spending…. Except here is Ryan with not an outline, but a detailed plan … with none of the downside. Why would anybody look at Simpson-Bowles again?” Norquist said Friday.

In addition to Conrad, the Gang includes Senate Majority Whip Dick Durbin (D-Ill.) and Sens. Mark Warner (D-Va.), Tom Coburn (R-Okla.), Mike Crapo (R-Idaho) and Saxby Chambliss (R-Ga.). Norquist has feuded with Coburn over whether tax simplification that eliminates earmarks and loopholes must also lower tax rates to such an extent that there are no net tax increases.

“Now the only people who are going to want to grab onto the Gang of Six are Democrats,” Norquist said, adding that the Gang can meet “all they want” but they are going nowhere.

“The House is going to pass the Ryan plan every year until the Senate catches up,” he said. “The 2012 Republican presidential candidates are going to run on it.  2012 will be Ryan vs. Obama.”

Freshman Rep. James Lankford (R-Okla.), a Budget Committee member, agreed. He told The Hill Friday the Ryan plan makes clear the House will not pass a Bowles-Simpson-based plan that raises taxes.

“If there is a way we can do this without raising taxes, why don’t we try it?” he said, noting the Ryan plan would succeed in balancing the budget without raising taxes.

He said that Democrat arguments that they will only cut benefits for the poor if they can “poke the rich in the eye” with taxes “just doesn’t make sense.”

 In an emailed statement, the left-of-center Third Way’s Vice President for Policy Jim Kessler called the Ryan plan “a real setback to getting a centrist deal through the House.”

“[H]e knows full well that there is no chance that Congress will block grant Medicaid, voucherize Medicare, or cut the top income tax rate to 25-percent,” Kessler said.

In contrast to Norquist, Coburn’s office argued Friday that the Ryan plan furthers a comprehensive deficit solution.

“Dr. Coburn strongly supports the Ryan budget because it will push both chambers to deal with the real problem, which is unsustainable entitlement spending, particularly related to healthcare,” spokesman John Hart said.

“Unfortunately, conservative interest groups who treat every tax earmark as sacred will do as much to prevent a solution like the Ryan budget from being enacted as left-wing interest groups who treat entitlements as sacred,” he added. “Groups that root for a stalemate while defending tax earmarks are asking for a sovereign debt crisis that will bring about the most onerous tax increases in history.”

The House-Senate stalemate that the Ryan budget may be cementing could be exploded by the need to raise the nation’s $14.3 trillion debt ceiling, several deficit hawks pushing a grand debt bargain said.

When asked last week how his plan becomes law, Ryan said when it comes time to raise the nation’s debt ceiling in the next few months, his budget offers “a menu” of choices of what to attach to the bill and noted many of its ideas were called for by the debt commission.

“My guess is that Ryan’s budget will not be the nail in the coffin [of the Gang of Six] but an opening bid in negotiations that will arise from a crisis over the debt limit,” Concord Coalition Executive Director Bob Bixby said.

“If the three Republicans really mean what they have been saying about everything being on the table, they will commend Ryan’s budget but continue working with Conrad, Warner and Durbin on an alternative,” he said. Once they have a plan, it could be offered in the context of the debt ceiling vote.

Steve Bell, a former GOP Senate budget staff director now at the Bipartisan Policy Center, said Ryan’s plan advances the conversation on the deficit and also can be seen as a House Republican opening offer in future talks with the Senate.

He suggested that a May debt vote could be tied to a requirement that an agreement be forged by the end of 2011 on deficit reduction. That could lead to months of negotiations and a bipartisan deal based on the Gang of Six.

At this point, Republicans have already had the opportunity to flatly reject the president’s debt commission when compared to the Ryan budget, however.

At last week’s committee markup of the Ryan budget, Blue Dog Democrat Rep. Heath Shuler (D-N.C.) offered the outlines of the president’s debt commission plan as an amendment. All Republicans voted against it while 13 Democrats voted “present,” with Rep. Tim Ryan (D-Ohio) joining Shuler in voting “yes.”

Bell said that one way to look at the vote is that the fiscal commission report’s constituency in the House is the shrunken Blue Dog caucus.

The reality of the debt ceiling, however, could drive the parties toward compromise on what needs to be tied to it in order for it to be raised, he said.

“There may be a fight between House and Senate. At some point reality, and reality therapy can be very painful, at some point reality will set in,” he said.

Ryan, it should be noted, in voting against the Shuler amendment praised it for its sincerity and said the level of tax increase in it would hurt growth.

He did not say he opposed any and all tax increases, or to looking at what the Gang of Six is doing.

This article was updated on April 11 at 7:30 p.m. to clarify Grover Norquist’s position on eliminating earmarks and loopholes in the tax code.