John E. Sununu

Round II of the US debt debate

By John E. Sununu
August 15, 2011

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AS DEBT limit negotiations crescendoed last month, Senator Max Baucus candidly admitted that Congress wasn’t only motivated by the Treasury’s Aug. 2 cash flow deadline. With the August recess looming, he predicted, “those old jet fumes are going to help us’’ finish the job. As if on cue, Congress scrambled to cut a deal just in time to catch their flights home.

With the Capitol vacant, pundits quickly proclaimed winners and losers. But this was just the second round of a multi-stage, multi-player contest, which began this spring with a deal to keep government operating while trimming spending for 2011. In this game, it’s not just the outcome of the most recent deal that determines success or failure. Establishing position for future negotiations matters even more.

No one in Washington understands this better than Mitch McConnell. With few rules, the Senate remains in a perpetual state of negotiation. Everything is on the table all the time. Throughout the debt battle, the Republican leader kept his caucus together and played his cards close. He allowed the “Gang of Six’’ to negotiate directly with one another, but kept communication channels wide open. Ultimately, he brought a workable deal to his Republican colleagues, and gave them room to vote their conscience. They couldn’t have asked for more.

The trust McConnell earned will be put to work immediately with his three choices for the special committee charged with finding another $1.2 trillion in deficit reductions. In John Kyl, Rob Portman, and Pat Toomey, McConnell chose members with deep knowledge of the budget process. Portman, for instance, served as the White House budget director. They don’t come from states with overwhelming agricultural or energy interests - so farm and oil subsidies will be fair game - and they’re unfettered by the politics of coming elections.

These senators will be instrumental in selling any prospective agreement to colleagues ranging from the old guard to centrists to Tea Partiers. In the House, Speaker John Boehner’s selection of Dave Camp, Fred Upton, and Jeb Hensarling matches up in roughly the same way. Within his caucus, Boehner will also benefit from his gritty negotiating performance. He told his Republican House members what he would do, and then he did it. He won an agreement that contained “dollar-for-dollar’’ spending cuts for increases in the debt limit, and he did so without tax increases.

Harry Reid had a tougher task. “Senate majority leader’’ is a nice title, but Reid never had the votes to pass his own plan. With 23 open Democratic Senate seats, he must have felt like a frantic circus performer trying to keep two dozen spinning plates in the air. Last week, he also took an old-guard and centrist approach by tapping John Kerry and Max Baucus for the special committee. With the the chairmen of the House and Senate tax panels - Camp and Baucus - on the committee, tax reform could play a more significant role in the final recommendations.

Perhaps Reid views Patty Murray of Washington as the liberal equivalent of Pat Toomey. She may well hold the confidence of the hard left, but as chair of the Democratic Senate reelection committee she may be more focused on politics than substance. Nancy Pelosi’s picks have a similar partisan pedigree; Jim Clyburn and Chris Van Hollen have served in Democratic leadership posts, and Xavier Becerra quickly became a flashpoint when a fundraising letter touting his appointment went out just two hours after it was announced.

Despite the partisan tinge, it’s possible to envision an agreement coming together, heavy on tax reform and including a handful of changes to entitlements - mostly having to do with payment rates and methods.

In all of this, one notable absence is the president. He behaved inconsistently throughout the debt debate, moving in and out of the negotiations and then deferring at different times to Joe Biden and the Gang of Six. His erratic behavior makes it tougher to assert himself in the next round, and unlikely that he’ll have much influence on the Special Committee recommendations. With a panicky stock market and debt-rating downgrade, he’ll sign any deficit reduction proposal that reaches his desk.

In a multi-round negotiation, credibility is key. The president walked away with less; most of the congressional leadership walked away with more. That probably doesn’t change the likelihood that the next round succeeds, but it means any outcome will be driven by Congress and not the White House.

John E. Sununu, a regular Globe contributor, is a former US senator from New Hampshire.