Return of the “Grand Bargain”

Conversations, speeches, press releases and headlines from Capitol Hill are merging the government shutdown and debt ceiling crises into one. Solutions to Washington’s myriad of fiscal problems are also beginning to converge in the return of the ever-fateful “Grand Bargain.”

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“We’re getting closer to the point that everything’s intertwined — government funding, the debt ceiling and spending,” Republican Rep. Steve Stivers of Ohio told Politico Thursday.

Despite the headlines out of Washington warning a fiscal situation of an unprecedented nature, federal budget and deficit hawks can recall: we have been here before, but in reverse.

In August of 2011, Congress successfully voted to raise the debt ceiling (albeit at the last minute), and in November the same year a continuing resolution to fund the government was agreed to in place of a federal budget — which has been missing since 2009.

That was the year talk of a Grand Bargain first emerged in what began as private meetings between Republican Speaker of the House John Boehner and President Barack Obama. In exchange for cuts to federal programs and entitlement spending from the Democrats, Republicans would concede to additional revenue through a re-write and increase to the federal tax code. A classic Washington compromise, and one on a scale not seen for at least two previous administrations.

The Grand Bargain was aptly named. The ambitious proposal was aimed not only at averting contentious continuing resolutions and debt ceiling votes in a divided Congress, but also at lowering the nation’s deficit and moving toward a long-term balanced budget. In an era of intense political partisanship and socio-economic inequality not seen in America since the Civil War or the Industrial Revolution, the Grand Bargain of 2011 was precedent-setting for legislative negotiations.

All of which gave its failure that much political fallout. The president and the speaker met secretly at the White House to keep the delicate talks from becoming damaging talking points by the partisan hard-liners in both of their respected camps, Boehner’s in particular, that comprised of more than eighty freshman tea party-aligned lawmakers who signed a pact to never raise taxes.

Their fears were justified, and through a series of political gaffes on both sides, the Grand Bargain became a greater failure.

As the remainder of both sides found out, the president demanded higher tax revenue based on a new bipartisan Senate plan, and House Majority Leader Eric Cantor rallied his tea party caucus against Boehner, forcing him to withdraw his tax concession. The fallout from the failed negotiations resulted in a downgrade of the U.S. credit rating, a loss of presidential political capital, and nearly cost Boehner his seat as Speaker.

All of which lead directly to where we are now.

“so the best way out, I believe, and the only way for everybody to find an acceptable long-term solution is a big negotiation of everything that includes something on entitlements, tax reform, something on a spending level and wrap it in one box,” Rep. Stivers said to Politico.

Which is exactly why the Grand Bargain is slowly being resurrected in the face of the first government shutdown in 17 years, two weeks away from reaching the current debt ceiling limit, with neither party — in either chamber — giving in to the other. With Republicans taking the majority blame in public polls and mainstream media, and Boehner already announcing he will not allow the country to breach the debt ceiling, Democrats are unlikely to concede on the Republican demand to defund the Affordable Care Act that went live Monday.

That also increases the likelihood Republicans will need a big deal to save face, and influence.

“House Republicans tell me Speaker John Boehner wants to craft a ‘grand bargain’ on fiscal issues as part of the debt-limit deliberations, and during a series of meetings on Wednesday, he urged colleagues to stick with him,” National Review’s Washington editor Robert Costa said according to the Washington Post on Thursday.

“It’s the return of the grand bargain…. (Boehner’s) looking hard at the debt limit as a place where we can do something big,” Costa said, quoting another House Republican.

Boehner reportedly raised the idea during the congressional leadership meeting hosted by the White House on Wednesday, but was met with resistance from Senate Majority Leader Harry Reid, who maintains no negotiations will go forward until the House passes a clean continuing resolution.

“The message I have for the leaders is very simple,” President Obama said on CNBC Wednesday. “As soon as we get a clean piece of legislation that reopens the government, and there is a majority for that right now in the House of Representatives. Until we get that done, until we make sure Congress allows treasury to pay for things that Congress itself already authorized, we are not going to engage in a series of negotiations.”

Any hope of a Grand Bargain will likely require the most out of Boehner – who will have to suspend the Hastert Rule requiring a majority of the House majority party’s support to bring a bill to the floor. Additionally, the Speaker will have to count on both Democratic and GOP moderate votes, like the ones he called on Thursday to ensure safe passage of a debt ceiling hike.

“Hurricane Sandy, the fiscal cliff — all of the big votes require reasonable Republicans and Democrats to come together in order to pass it and get it to the president’s desk. This will be no different,” Republican Pennsylvania Rep. Mike Fitzpatrick told the New York Times Thursday after Boehner told colleagues he would support a debt ceiling hike.

“I’ve been there in the past and I’m prepared to be there again,” Fitzpatrick said.

House GOP moderates like Fitzpatrick and some 21 others will be crucial to deciding the nation’s fiscal future, and will likely be the key hands reaching across the aisle if a real Grand Bargain is on the horizon.

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