07/30/2013 10:21 am ET Updated Jul 30, 2013

Mitch McConnell's Sequestration Deal Would Replace 'Crappy Cuts With Crappy Cuts': Democratic Aide

WASHINGTON -- Congressional Democrats aren’t jumping at the latest offer from Senate Minority Leader Mitch McConnell (R-Ky.) in the two parties' still-elusive search for a “grand bargain” on budget matters.

McConnell said Monday that he would be willing to reduce –- in part or in full -– the impact of sequestration cuts, including those to domestic spending, in exchange for reforms to Social Security or Medicare.

“You want sequester relief? Then let's talk about a reduction in entitlement spending,” McConnell said in an interview with National Review. He added that “a place to talk is on things like chained CPI” –- a way of measuring inflation that would reduce Social Security benefits -– “and raising the age for Medicare.”

Republican leadership has been resistant to lessening the domestic cuts included in sequestration -- in fact, House Republicans are currently crafting appropriations bills that would make them deeper -- and Obama has entertained entitlement reform as part of big-scale budget negotiations. So McConnell’s offer is not entirely insignificant.

But the initial reaction from senior Democratic Senate aides was basically a scoff, noting that the offer was a far cry from where negotiations between the president and Republicans stood during the last round of budget discussions.

“Our caucus would not accept entitlement cuts to replace the sequester -– that’s just replacing crappy cuts with crappy cuts,” said one top aide, who like others spoke on condition of anonymity to discuss budget deliberations. “Our position in the last round of negotiations was we’d do chained CPI for $1 trillion in additional revenues and getting rid of the sequester for 2 years, on the assumption that at that point it’d never really go into effect.”

Another aide said that accepting the deal would be bad politics for Democrats, arguing that Republicans would just come back afterward and push for additional cuts to discretionary spending. Sequestration would be gone but the Republican zeal for deficit reduction wouldn’t.

Certainly, Senate Republicans believe they are in a more advantageous negotiating position heading into the fall budget battles. Sequestration can’t be turned off without their approval and there are no triggered tax hikes that the president can use as leverage to get concessions.

“This is the first big cliffhanger in a long time where there wasn’t a tax hike looming over everything,” said one top Senate Republican aide. “That’s one less hostage for the White House.”

And so, the White House is directing its focus elsewhere. The president will reportedly offer Republicans a deal during his speech Tuesday at an Amazon warehouse in Tennessee. In exchange for restructuring the corporate tax code and lowering top-line rates, he will ask for money to be spent on job creation measures.

It’s a stimulus proposal more than a budget deal, and it largely depends on using a one-time boost in revenue -- mainly from capping accumulated foreign earnings by corporations -- to pay for infrastructure and school repairs, among other items.

But congressional Republicans were doing a bit of scoffing of their own. An aide to House Speaker John Boehner (R-Ohio) said that the party opposed lowering corporate rates without also reducing tax rates for individuals

“We have always been opposed to corporate-only tax reform,” said the aide. “They know this is our position. Why they are telling you that breaking off the corporate piece would be a concession to us is a mystery to me – and makes you wonder about their motives. It’s the opposite of a concession."

"Second, it has always been our position, and until today we believed it was the president’s position, that the corporate side of tax reform should be revenue neutral," the aide continued. "Now they want to raise untold tens of billions of dollars in revenue through corporate reform. Again, the opposite of a concession.”



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