Paper Outlines How Congress Can Avoid Impending Fiscal Cliff

Oct. 18, 2012

Washington, D.C. – The Bipartisan Policy Center (BPC) today released a “Framework for a Grand Bargain” that would allow the 112^th Congress in its lame duck session to both avoid the impending “fiscal cliff” and set the stage for the 113^th Congress to undertake spending cuts and revenue increases in order to stabilize the nation’s debt trajectory.

This framework is an outgrowth of the continuing work of BPC’s Debt Reduction Task Force, co-chaired by former Senator Pete V. Domenici and former Office of Management and Budget Director Dr. Alice Rivlin.

View BPC's interactive Fiscal Cliff Timeline

The framework legislation, intended for consideration during the lame duck session following the November election, consists of four major elements:

1. A requirement that the committees of jurisdiction of the 113^th Congress achieve a specified target of debt reduction over the coming decade;
2. A parliamentary procedure – “accelerated regular order” – which would reduce the threshold for passage of such a debt reduction package to a simple majority;
3. A backstop of automatic cuts to mandatory spending and tax expenditures that would replace the fiscal cliff as a forcing mechanism for Congress to act;
4. A down payment of spending cuts and revenue increases to be enacted immediately.

“One of the reasons the Joint Select Committee on Deficit Reduction failed, in our view, was because only 12 lawmakers were setting policy for the entire Congress,” said Steve Bell, Senior Director of BPC’s Economic Policy Project. “The framework we propose today would both ensure an acceleration of regular budget order in the House and Senate, and it would involve all committees of relevant jurisdiction.”

Some congressional leaders have said in recent weeks that any attempt to develop a significant debt reduction package – a “grand bargain” – in the lame duck session will fail. While such circumstances are discouraging, both time and tasks will overwhelm Congress in the fewer-than-30 working days of the post-election session. Further, fully abrogating the sequester and simply extending current tax policy will call into question America’s ability to establish a sustainable fiscal path. BPC’s framework takes the logical middle road, allowing the 112^th Congress to begin the debt reduction process and the 113^th Congress to manufacture a $4 trillion package intelligently.

“The current sequestration process is bad fiscal policy and bad economic policy. Our framework would allow Congress to develop priorities on the spending and revenue sides and avoid ham-handed, across-the-board cuts and drastic tax increases that would hammer the nation’s taxpayers and potentially throw the U.S. economy back into recession,” said Bell. “We still support a big deal on the debt, but we think this is the currently the most practical approach to getting there.”

Read BPC's framework here.

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Economic Policy Project