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Former Sen. Evan Bayh, (D-Ind.), on efforts to reach a compromise over taxes and spending cuts.
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You let's turn to former Indiana senator Evan buying joining us now on the same topic senator I -- -- ask you spent enough time in DC didn't know how these things work.
I mean you said recently that the appearance of trying to negotiate across the -- in Washington is now perceived.
As a betrayal of your own party rather then you know trying to work together so how do you think this is gonna play out.
Well with -- as pessimistic as anybody about that dysfunction and gridlock in Washington.
But I do think there some reason to be cautiously optimistic here and I agree with.
A fair amount of what senator that are just I think the president having been reelected.
Will be more willing to take on entitlement reform doesn't have to worry about offending is based quite so much I think the fact that he's been -- will mean the Republicans don't have to focus on trying.
To defeat him quite so much and I think -- be -- -- in his legacy and he's got to get this done otherwise it's just gonna hang over everything for the next four years so.
You look at all that I think there's a window of opportunity here over the next six months to actually you know hammer out some difficult don't yeah -- it's -- -- lot of brinksmanship.
Right -- the eleventh hour but actually makes a major progress on these fiscal issues.
What -- think that the final deal looks like as you heard what senator -- ahead.
An end to meet while that might sound practical it does not sound like something that Democrats would accept here in the wake -- what they think is a mandate.
Mean it seems like Democrats want to die on the hill.
Of this marginal tax increase on people either over 250000.
Couples or over a million do you think that that's essential.
To getting a deal done that -- have to -- -- No.
Leaders -- senator Schumer party said he thinks it should be a million dollars so I think there's a lot of room for maneuver there I think the harder part.
With regard all that is the treatment of dividends and capital gains.
You know clearly Republicans -- -- have that treated in a way that fosters investment growth.
Democrats want to focus on you know equity for people who drive the vast majority of their income from -- sources like that I think that's the harder issue.
So how do you think that gets resolved.
Well that's a good question I tend to be a little more moderate on these things -- most members of my own party.
-- to guess I'd guess they're now fifteen -- prod both go to twenty.
Something like that -- -- people being pushing for more than that but -- my guess is that that's not a bad place to.
To compromise.
S who's now Ito that the who's been through it so many times and is now probably thankfully on the sidelines watching every one fight this one -- What is your bet on how this plays out from here.
My -- is about a 40% chance -- framework being announced.
Two to one spending cuts vs revenue increases.
Tax reform amended the committees to go do it and then some sort of sort of damocles.
On June the thirtieth that if they don't get the job done.
Well here's exactly what's gonna go into effect so I think that's the -- scenario it senator bidder was outlining and I it's about a 40% chance 30% chance we go over the cliff for 48 to 72 hours.
That would cause a hold a break loose and people that then the votes were actually because taxes were all gone up.
That everyone's voting to bring them back down for people who really don't want to vote for any kind of tax increase whatsoever.
And then you know 50% chance that there's just a complete failure and another 50% chance they really get.
Everything done but I so I think that the most likely outcome.
Is a framework.
Where -- timeline and consequences of -- don't meet the timeline.
And a modest down payment toward getting the deficit down I think that's the most likely outcome but -- as I said before -- A lot of volatility a lot of uncertainty -- -- get done until the eleventh hour.
And that any different at several points time each -- will walk away from the table throw up their hands and say that's that's it and the next day the market.
We'll sell off very dramatically like once someone gets -- in the NBA -- -- just lay on the ground riding in -- like they've been murdered you know I mean we'll see some of that of -- the whole thing gets died.
If I have I've got ten seconds your your viewers may remember the TARP vote senate passed 7525.
Whatever the house house voted down stock market drop 700 points in an hour and a half.
That was what it took to force the house to come back yeah and actually pass that -- if you might see something like that but I think the better the better bet is that at the eleventh hour they announce a framework.
Yes if we have the framework with you know all hell breaking -- July or June or whatever it is.
We did this mean that sounds very familiar it makes these deadline seems so fake -- it seems like that's what we set up for this time.
That's true bottom.
The framework will be.
Two dollars of spending reductions in and out -- -- for every one dollar of revenue.
They'll instruct the committee's you've got to come up with tax reform here's how much -- has to generate the way of new revenue.
And they will have a consequence for failure -- like this -- Melissa you know big differences this time was Armageddon.
If they didn't get the job done it was clearly an unacceptable outcome.
Next time I think that sort of damocles will be something that people could kind of live with and therefore is more likely to actually go into effect.
Senator thank you so much for coming -- we appreciate your time tonight.
Good look at your book you have -- -- -- our.
