I have a piece for The American Prospect today about the Gang of Six proposal, and how it increased the possibility of default:
Gang of Six fever has overtaken the Senate, and everyone has an opinion on how to incorporate the proposal into the debt-ceiling deal. Senator Richard Burr, a Republican from North Carolina, wants a short-term increase of the debt ceiling to give the Gang of Six time to translate their plan into legislation. Similarly, Gang of Six member Kent Conrad, a Democrat from North Dakota, suggested a six-month debt-ceiling increase. (Sen. Mark) Warner met with Reid to try to work parts of the Gang of Six proposal into the McConnell-Reid backstop plan. Even two House members, Frank Wolf, a Republican from Virginia, and Jim Cooper, a Democrat from Tennessee, called for a House vote. By the end of the week, Warner agreed, describing the endeavor he led as “the only bipartisan effort in this town.”
Simply put, the Gang of Six plan, airdropped into the debate with two weeks until default—after seven months of talks—adds another layer to the available options and makes the already tumultuous negotiations even more complicated. That was the last thing anyone needed this late in the game. Indeed, it knocked McConnell-Reid off its path because the Gang of Six suggested a bigger deal was possible. In fact, though, it only showed that an unwritten, unformed idea of a deal was possible.
One thing I don’t think I totally got in the piece was the supreme arrogance of the Gang of Six. The deal wasn’t only unformed, it was incomplete. It broke up a couple months ago over Tom Coburn wanting more Medicare cuts than Democrats in the Gang, particularly Dick Durbin, were willing to give up. Those differences are STILL reflected in the proposal. If you look at their five-page outline, it says that the plan will save between $3.6 and $3.7 trillion, and that lawmakers will “find an additional $202 billion/$85 billion in health savings.” They are $117 billion apart in their own document!
But the Gang couldn’t let the moment pass without their inclusion, so they dropped their incomplete five-page outline. And it added a layer of complexity to the negotiations by providing a new alternative. And while its tax component is an impossible mess, because the targets for revenue gains are substantially higher than what Obama and Boehner were negotiating, it forced the White House to demand more revenue, blowing up those talks.
These so-called deficit hawks just couldn’t imagine an agreement without their wise counsel, so they bigfooted into the debate. In the process, they blew up the only two solutions on the table at the time, and added this alternative that produced a panoply of opinions about how to move forward. It gave everyone something to hide behind, so they could say “I support a deficit plan, but they won’t bring the one I like up for a vote.” It’s the first rule of negotiation: you don’t throw in a whole new plan at the end of the process.
Let’s remember that, if the nation defaults, or even if debt gets downgraded, borrowing costs will rise, probably significantly. And the Gang of Six, with all their concern about the deficit, will be responsible for costing the nation more money.