The Balanced Budget ‘Poison Pill’ and ‘Theoretical Conversations’: Where We Are, Friday Evening 7/29

Jul 29, 2011 5:48pm

Democrats close to the negotiating process say that House Speaker John Boehner, R-Ohio, has made his deficit reduction legislation a non-starter in the Senate by adding the Balanced Budget Amendment.

A case could be made that the previous incarnation of the Boehner bill might have become law. Let’s say come Monday no compromise legislation was close to being successfully negotiated, and the previous Boehner bill had passed and the Stock Market was tanking. Despite 53 Democratic Senators signing the letter saying they would oppose the bill, despite the president’s advisers having formally recommended that he veto it, there still seemed a chance it could become law. A last chance, but a chance.

Not so with this latest bill, Democrats say. The Balanced Budget Amendment mandates a balanced budget every year – which no one in this process has proposed. Even the House Republican budget with its deep spending cuts, left an annual deficit of roughly $400 billion.

“Balanced as the standard is well beyond what anyone has proposed or recommended,” one Democrat said.

Moreover, Democrats say if the Balanced Budget Amendment had been law in 2008 and 2009 — when deficit spending would not be abnormal because of the recession — the nation never would have recovered at all. Some Democrats call the addition of this provision a “poison pill,” legislative-speak for a provision that mandates that the bill will never pass, since its addition makes it impossible to swallow.

Democrats close to the process refuse to game out what will happen next – they simply don’t know. They’re heartened by some Senate Republicans suggesting in public comments that a compromise needs to be found –specifically mentioning Republican Senators whose comments might suggest they’d be amenable to a compromise to avoid risking default:

  • Sen. Lamar Alexander of Tennessee
  • Sen. Scott Brown of Massachusetts
  • Sen. Saxby Chambliss of Georgia*
  • Sen. Tom Coburn of Oklahoma*
  • Sen. Bob Corker of Tennessee
  • Sen. Mike Crapo of Idaho*
  • Sen. John McCain of Arizona
  • Sen. Lisa Murkowski of Alaska
  • Sen. John Thune of South Dakota

But Democrats remain very worried about the House. Whatever passes the Senate will then go back to the House, and will need Republican votes to pass.

All over town, sources say, staff members are having what one source close to the process called “theoretical conversations” with each other.

“Everyone knows the small bandwidth of options for the way this is going to end,” the source said, “and people are planning for the negotiations that will hopefully begin as soon as the House is done with it’s doing.”

With the Boehner bill and the bill being offered by Senate Majority Leader Harry Reid, D-Nev., both offering roughly $1 trillion in spending cuts, and mandating a super-committee to come up with more ideas for deficit reduction, the real problem is what would be the trigger for those ideas having to become law? Republicans say it needs to be another debt ceiling vote; Democrats disagree, but acknowledge there need to be incentives to require a vote.

So the “theoretical conversations” might be along the lines of, ‘My boss thinks this way is best and this is going to happen. But theoretically, if it does not happen, if some final compromise were the only thing that could avoid a crisis, we could see splitting the Boehner and Reid bills in such-and-such a way.’

Those conversations are not necessarily happening on the leadership level, but they are happening among Democratic and Republican staffers.

But one should not let the existence of these conversations fill you with confidence that this problem will be solved in time.

As of midnight tonight, the nation will be 96 hours away from when the US can no longer borrow money to pay its bills; our credit cards will have been maxed out.

-Jake Tapper (@jaketapper)

*Mentioned as members of the Gang of Six, not by name

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