Sen. Mark Warner (D-Va.) appears at a Barack Obama campaign rally at
Byrd Park on October 25, 2012 in Richmond, Virginia. (Photo by Chip
Somodevilla/Getty Images)
* Says pain of past failures, dire consequences to ease deal
* Less cooks in negotiating kitchen a good idea
* Decides against governor's run, has unfinished Senate work
By David Lawder and Kim Dixon
WASHINGTON,
Nov 20 (Reuters) - Mark Warner, a Democratic U.S. senator who had a
seat at the negotiating table for past failed attempts at a deficit
reduction deal, says this time will be different.
In
an interview with Reuters, Warner said he was optimistic Congress
would reach a deal to avert the "fiscal cliff" of tax hikes and
spending cuts due to be triggered in January and also commit to a
longer-term framework to get the U.S. debt under control.
"We've seen this movie before," the senator from Virginia, who
has been mentioned as a possible White House candidate in 2016, said on
Tuesday. "Why is this ending going to be different?"
Warner,
who sits on the Senate Budget Committee and belongs to the "Gang of
Eight" bipartisan group of senators working to develop a deficit
reduction plan, laid out three reasons.
One is that
Congress will not want to repeat the dismal failure of the last two
attempts at a deal, in last year's debt limit fight and supercommittee
talks. Those failures set up the current showdown.
Two:
the business community has come out in full force advocating a
balanced deal that will give lawmakers some political cover for making
sacrifices to meet in the middle on tax increases and entitlement
spending cuts.
Three: "The consequences are so dire of getting this wrong," Warner said.
Going
over the fiscal cliff would mean 600 billion worth of tax increases
and spending cuts starting on Jan. 2, a move that could be disastrous
for a still tenuous recovery.
Not taking action to
bring the $16 trillion U.S. national debt under control also risks a
European-style financial crisis and austerity measures.
Warner's
confidence a deal will be struck echoes the heartening noises coming
from the White House and congressional leaders - a sentiment that
soothed jittery markets on Friday and Monday.
President
Barack Obama and congressional Democrats want Bush-era tax cuts to
expire on the wealthiest 2 percent of Americans. Republicans oppose
raising income-tax rates, but have proposed raising some revenues
through tax reform measures. They also want cuts to "entitlement"
programs such as the Medicare healthcare program for the elderly.
Warner says there is a recognition that finding a middle
ground will pay huge dividends for growth and cement U.S. economic
pre-eminence in the world.
"There is such a positive
upside to getting this right." Warner said. "Frankly, getting this
right will have more significance for job creation than anything that
the president or Governor (Mitt) Romney talked about on a specific
programmatic basis during the campaign."
Federal
Reserve Chairman Ben Bernanke also spoke on Tuesday about the huge
upside of a deal that avoids the fiscal cliff and lays the groundwork
for a longer-term deficit-reduction plan.
"Cooperation
and creativity to deliver fiscal clarity - in particular, a plan for
resolving the nation's long-term budget issues without harming the
recovery - could help make the new year a very good one for the
American economy," Bernanke told the Economic Club of New York.
Conversely, Bernanke warned that the Fed lacked the tools to
be able to compensate for a failure by Obama and Congress to avoid
the fiscal cliff.
STAYING IN SENATE
Warner,
with two years to go in his first Senate term, announced on Tuesday he
would not heed calls for him to run again for Virginia governor in
2013, a post he held from 2002 to 2006.
Warner
cited the fiscal cliff as top among the unfinished work he has in the
Senate, along with immigration reform, education improvements and a
revamp of energy policy.
He described himself as obsessed with putting the United States on a sustainable fiscal path.
Warner
has spent the better part of the past year working with the Gang of
Eight to craft a potential framework that would lead to some $4
trillion in deficit reduction.
For now, however,
Warner said he was watching intently from the sidelines as Obama, House
of Representatives Speaker John Boehner, Senate Majority Leader Harry
Reid and other congressional leaders start negotiations.
"The notion of less cooks in the kitchen may be worthwhile," he said.
But he is ready to add the Gang of Eight's "work product" into the mix of proposals at an appropriate time.
Like
many in Congress, he envisions a short-term deal to blunt the impact
of automatic spending cuts, coupled with a commitment to shrink
deficits through tax reforms and entitlement cuts next year.
"Everybody acknowledges that you're not going to rewrite the
tax code in the 12 legislative days left. You've got to make enough of a
down payment to pass the market smell test."
Returning
the top two tax rates to their levels during the Clinton
administration is the "cleanest" way to get needed revenue, which may
actually help tax reform efforts next year that would reduce rates and
eliminate credits and deductions, he said.
Warner, a
successful telecoms investor and entrepreneur, said he also believed
that taxes on capital gains should go up, but should still be about 10
percentage points lower than the top rate for regular income, compared
with the current 20-point gap. (Additional reporting By Richard
Cowan; Editing by Karey Wutkowski and Peter Cooney)
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