Tales From The Acne

Watching Prof. Obama hold court yesterday made for surprisingly compelling television. Even more interesting were the non-televised breakout sessions. After the jump, the highlights, including an irritible John McCain, the prospects for a commission on long-term budget reform, Sen. Baucus's expectation of a 70-vote margin on health care reform, the floating of a VAT, Rep. Rangel's tax reform preferences, and more.

Procurement

Lieberman also announced that he and Collins have asked McCaskill to chair a new Homeland Security subcommittee on procurement oversight.

And McCain, when talking about the military, popped off on Iraq and Afghanistan: "We will be shifting those troops that come back from Iraq not back to the united states ... but to afghanistan. And they'll be gone for a long time ... I think the president's announcement of 17,000 is only a first announcement."

 

Other than that, McCain was the most combative of the lawmakers. He appeared irritable and close to losing his temper at one point with Tauscher, when she said that satellite contracts in California needed to be preserved, despite cost overruns.

Budget reform

With all those different ideologies represented and turf to be protected, little consensus was reached. At issue was whether to name a commission that would circumvent the legislative process, come up with concrete proposals on taxes and entitlement, and - if a supermajority could be reached within the commission - present those proposals to Congress for a guaranteed up-or-down vote with little to no amendments possible.

To advocates, Congress has shown there is no other choice.

"Procedure drives policy," Sen. Gregg said. "We need a procedure that will allow Congress to reach a conclusion."

"It is unrealistic to think that a system that has delivered this problem is going to take us to a better place," said Sen. Bayh.

But, as Rep. Herseth Sandlin noted, "clearly there are pockets of resistance."

And those pockets spoke out strongly, painting the commission as an undemocratic, unfair abrogation of responsibility that would be destined to fail. That position was taken by Messers. Obey and Spratt, and to some extent, Rep. Van Hollen, and seconded by the liberal interest group representatives.

"A commission response will thrill policy wonks and not get a damned thing accomplished," Mr. Obey said. "Count me among the strong skeptics."

Mr. Greenstein said he was worried that a commission would just throw the fiscal issue into the future, "and before we know it, we run into the 2010 election."

President Obama has popular opinion behind him, Mr. Greenstein said. He needs to be given the room to forge a bipartisan agreement on his own.

Health care

Sen. Max Baucus: (Walked in late) "I just knew this would be a lot more interesting than tax reform so I would come over here."

"I am very pleased. I believe that we have a huge opportunity. The stars have aligned." "It has to be uniquely American solution" with a combination of public and private involvement.

"I am very excited. It has to bicameral and bipartisan. I am often asked by some, 'well Max, why don't you do reconciliation. My answer is no. My first preference is 60, maybe 70 votes, when it is all said and done."

In the early stages, it is important they focus on "not blowing it" - by getting focused on ideologies.

"Everything is on the table." It has to be "bipartisan, bicameral."

 

Taxes

Geithner then invited about a dozen other guests, who were sitting around the edge of the room, to weigh in. It was an ideologically diverse group: John Cavanagh of the Institute for Policy Studies spoke admiringly of the 91 percent top tax rate of the 1950s and informed Geithner that "there are a lot of wealthy people who are willing to pay more" in terms of taxes. Yale Law Prof. Michael Graetz, a big champion of the VAT tax, pushed that idea as a means to raising the additional revenue you need to fund government and health care reform while promoting economic growth. Graetz and a few others agreed with Rangel that it's a good idea to bring the corporate rate of 35 percent down in order to make the U.S. more competitive internationally.

Larry Mishel of the Economic Policy Institute agreed that a VAT "may be appropriate at some point." And Bill Gale of Brookings said a VAT tax or a carbon tax "seems to be where we're headed" unless we intend to slash federal spending. Gale also offered this plug for the summit: "To me, the overriding news of the day is we have a president who says there is a fiscal crisis and the buck stops here. I'm much more optimistic than I was six months or a year ago." That prompted White House economic adviser Jason Furman to turn to your pool and declare: "I hope you all got that."

Former IRS commissioner Fred Goldberg, now at Skadden Arps, added his voice to the VAT bandwagon, and cautioned that collecting on the tax gap is far tougher than it might appear. Goldberg also offered a plug for the summit, saying "A presidential intiitaitve to deal with fiscal issues is hugely important because the capital markets will slaughter us if we don't come to terms with this."

Other attendees included Maya MacGuineas from the Committee for a Responsible Federal Budget, a guy named Joe from the Committee for Economic Development (your pool could not read his nametag from across the room,) a lady from La Raza (ditto) and another lady who talked about pro-growth tax policies whose name appeared to be Sarah Warnell. But I wouldn't swear to it.

Romer closed. "We obviously knew this was not going to solve th eproblem. This is the start of solving the problem.... The main thing we want to say was the lines are open.... The president has made it clear this is a very high priority. And it will be worked on very hard over the next six months."