Government shutdown? A leap of trust can seal a budget deal

Budget talk in Washington is again dominated by nonnegotiable demands and a potential government shutdown – or even an unprecedented default on US debt in October. Despite the heated rhetoric, we believe that a bipartisan agreement is still possible on a meaningful budget deal that puts America on the path to fiscal responsibility.

We believed this in 2010, when we co-chaired a bipartisan national commission to fix the debt, and we still believe it. The country simply can’t afford to keep lurching from one fiscal crisis to the next. True, some fiscal progress has been made, but the underlying problem remains: In just a decade, the debt will be equal to 77 percent of our economy – draining resources to pay interest on the debt, and negatively affecting American jobs, consumer credit, and the country’s competitiveness.

Still, we’re hopeful about a fiscal deal, in part because of our experience in revising a deficit-reduction plan based on last winter’s negotiations between President Obama and House Speaker John Boehner. In the process of splicing that plan together, it became clear to us that the two sides had been quite close to reaching an agreement and that the remaining policy differences could be bridged if both sides were willing to go a little further and come to a principled compromise without compromising their principles.

Our revised plan, The Bipartisan Path Forward, would go further than many Democrats have been willing in reforming costly entitlement programs that are driving long-term debt, particularly health care. It would, for instance, move away from Medicare’s fee-for-service delivery system and gradually increase the eligibility age. Our plan would also require Republicans to accept more revenues beyond the expiration of the 2001 upper-income tax cuts agreed to in January.

Our plan would implement entitlement reform in a way that provides important protections for the most vulnerable. And it would raise revenue through tax reform that repeals or reforms various deductions, exclusions, and credits; lowers rates; and ultimately reduces the deficit. Both sides would have to go beyond their political comfort zones to reach a real budget deal. But the end result would put the debt on a downward trajectory for the long term.

The sad lack of trust between the two parties in negotiating on fiscal policy has been perhaps an even greater obstacle to an agreement than the deficit details themselves. However, the dinners that the president hosted with Republican senators earlier this year were an important and long overdue effort at building the understanding that will be critical to getting that kind of a bipartisan agreement.

These social events have led to discussions between senior White House staff and Republican senators about the budget and replacing the mindless, across-the-board cuts in defense and domestic programs (known as sequestration) with smart, selective cuts.

President Obama also deserves credit for the budget that he proposed earlier this year. It took a significant step toward a possible bipartisan agreement by incorporating the tough choices and politically difficult compromises contained in the last offer he made during negotiations with Mr. Boehner in December – including reduced cost-of-living increases for seniors and expanding means-testing for Medicare.

For their part, a growing number of Republican senators have indicated they are willing to accept new revenues as part of a deficit reduction plan that also contains meaningful entitlement reforms. To be sure, significant differences remain between the parties on important details, but there has been a mutual willingness – at least between some GOP senators and the White House – to make politically difficult compromises if the other side is doing so as well.

Budget negotiators should also take heart in bipartisan Senate agreements on the politically difficult issues of immigration and student loans. They have led to renewed interest in bipartisan discussions on the budget. They show what can be accomplished when both sides talk to each other instead of past each other.

We are also encouraged by timely proposals on tax reform emerging from Congress – from the yeoman’s work of House Ways and Means Chairman Dave Camp (R) of Michigan and from Senate Finance Committee Chairman Max Baucus (D) of Montana and ranking member Orrin Hatch (R) of Utah. A bipartisan deal on tax reform could unlock one for the budget.

The senators’ “blank slate” approach would eliminate every tax preference and require advocates to justify adding each one back. This approach will hopefully result in many tax breaks being eliminated or scaled back, even beloved deductions such as for mortgage interest. Such a strategy could accomplish the Republican goal of substantially reducing rates and the Democratic goal of raising new revenue.

It is going to take political courage on both sides to come together on fiscal common ground. The problem is real, the solutions are painful, and there is no easy way out. But there is room for a solution. We must find it for the sake of our grandchildren, ourselves, and our country.

Erskine Bowles and Alan Simpson co-chaired the National Commission on Fiscal Responsibility and Reform and now co-chair the Moment of Truth Project.

Readers: This is one of a new series by guest writers, some well known and some not, who offer ways to soften many of the polarizing debates over issues that sharply divide people. Are you working with others who don’t share your views in order to solve a problem in your community or beyond? E-mail us about it at commonground@csmonitor.com.