The grand bargain that has consumed so much of the oxygen in the budget debates over the last two years is not going to happen. Republicans won't agree to revenue increases, and without those increases, Democrats won't talk about entitlements. That's the equation going into the new budget talks between the House and Senate agreed to in last week's deal. So what now? A "mini-bargain"? That's what Jonathon Cohn
proposes is possible. The key is the second round of sequester cuts, this time largely focusing on defense.
Democrats once hoped to reach an agreement that would replace all of the sequestration cuts, which are supposed to last for ten years. But that would require the kind of grand bargain Republicans have rejected. That's why the best hope is probably for a much narrower deal—one that replaces a year or two of sequester cuts, while putting some money into Democratic priorities like transportation infrastructure and maybe a token investment in the president’s pre-kindergarten proposal. Such a deal might also include new revenue, but only a small amount, perhaps as a byproduct of tax reform or some kind of clearly dedicated user fee. (In other words, some kind of tax designated for a specific purpose, in the same way a gas tax is dedicated to transportation.) In exchange, Democrats could agree to a set of “mandatory spending” changes that didn’t touch Medicare and Social Security benefits—say, cuts to farm subsidies or federal retirement programs, or changes in the way Medicare pays for services. Some of these proposals are already in Obama’s 2014 budget proposal. Both the White House and congressional Democrats could go for this kind of deal—depending, of course, on the precise mix of components.
In theory, Republicans should also be interested in this kind of arrangement. They may not be eager to restore sequestration’s cuts to domestic programs, but they should be eager to restore sequestration's cuts to defense spending. They should also have some enthusiasm for more transportation spending, since that money is important in all parts of the country and plenty of Republicans have traditionally supported infrastructure. [...] One other reason Republicans ought to like this kind of scheme is that it would arguably do more to reduce deficits, at least over the long run. Sequestration cuts are set to expire after a decade; at that point, spending on domestic programs would return to previously set levels. Mandatory spending cuts, by contrast, are basically indefinite.
That might be giving Republicans more credit than they deserve when it comes to enthusiasm for actually governing, even on something as beneficial to their districts as infrastructure spending. After all, they've effectively
derailed the transportation bill two years running. Now, there would be enough Republicans who like the idea of bringing some transportation funding home to actually pass a deal like this. But, so far, they've refused to buck the teabaggers. Will their
ever-sinking poll numbers finally break that?