Why The Failure Of The Supercommittee Is Not A Bad Thing

Categories: Uncategorized

If media reports are correct, it appears that the congressional “supercommittee” will fail to reach its midnight Monday deadline to specify how it would trim at least $1.2 trillion from the budget deficit during the next decade.

This is probably a good thing.

(Technically, the committee has until Wednesday to reach agreement, but any plan has first to be on the table for 48 hours for review and to allow the Congressional Budget Office time to “score” the proposal.)  The immediate reason for the failure is that, in an election year, the purported cost of not reaching a deal pales in comparison to the political price both sides calculate they would pay at the polls come November if they actually negotiated a substantive compromise that really reduced the deficit.  Instead, both sides are gambling that they will be better positioned to negotiate a year from now.

In my view, this is a gamble worth taking.  What’s that, you say?  How can the decision to postpone a deficit reduction be good news? A bit of background is in order: you will recall that the 12-member bipartisan congressional committee was created as part of the negotiation that ended, at least for the moment, last summer’s debt default crisis. Under the agreement, the supercommittee, composed equally of six House Representatives and six Senators, was supposed to develop a deficit reduction plan by this Wednesday.  Assuming at least 7 of the 12 committee members agreed, that plan would then go to the full Congress to face a simple up-or-down majority vote in each chamber by December 23, with no option to amend the bill or filibuster it in the Senate. If Congress voted down the plan, automatic spending cuts totaling $1.2 trillion, divided equally between defense and non-defense programs, would kick in.  Crucially, however, those non-defense spending cuts would not touch the biggest budget busters: Social Security, Medicaid, food stamps and veterans’ benefits.  At the same time, there is a growing sentiment that deep cuts in defense spending are politically untenable at this moment.  Obama’s own defense secretary, Leon Panetta, has been quietly signaling the administration’s desire to renegotiate the defense budget targets.

And that’s why the plan was never likely to work.  Under the original agreement creating the supercommittee, the automatic deficit reduction plan would not kick in until January, 2013 – or until after the 2012 elections. Under that timetable, neither side really had any incentive to cut a deal, since they could avoid making hard choices and suffering the associated political costs until after facing the voters.  Remember, unlike during the debt default debate, a failure here triggers neither a government shutdown nor a debt default and a drop in the nation’s credit rating.  So, for most members it is easier to point fingers at the other side, knowing full well that the “automatic” procedures will then kick in to “force” across the board budget cuts that may be cuts in name only.  Each side can then play the blame game heading into November, and then use the election results as a referendum with which to replay the budget debate.

With hindsight, we should not be surprised that Congress’ effort to legislate by, in effect, tying their own hands, has not worked. Congress has a history of failed efforts to institute internal procedures designed to force them to pull the trigger on hard political choices that they were otherwise unwilling to undertake.  Think back, for example, to the Gramm-Rudman-Hollings (GHR) act Congress passed and Ronald Reagan signed into law in the 1980’s in order to curb burgeoning deficits.  The procedure, passed in 1986 and revised after a constitutional challenge in 1987, mandated across-the-board budget cuts (sequestration) if Congress and the President failed to reach agreement on budget reduction targets. For the first few years after passage Congress was able to jerry rig the deficit accounting process to avoid triggering the automatic cuts, but by 1990 when it appeared that no amount of creative bookkeeping could avoid sequestration, Congress instead negotiated a new budget agreement with President Bush that served as a crucial down payment on deficit reduction.  That ultimately led, when followed by the Clinton tax increases, to short-lived budget surpluses.  (Not incidentally, by breaking his no new taxes pledge, the 1990 budget agreement also was a significant factor in Bush’s defeat in 1992).

The point, and it is one that Newt Gingrich delights in making on the stump, is that no effort by Congress to make hard choices through automatic procedures is likely to succeed if Congress lacks the political will to enforce the agreement.  And in the case of the supercommittee, it is quite clear that both Democrats and Republicans would prefer, in an election year, to bear the political recriminations of failing to reach a deal over actually making difficult choices that would almost certainly alienate key elements in their respective political coalitions.  One needs only to turn on the television, and see the paid political advertising by groups like the AARP, which is threatening electoral retribution on any member of Congress who touches Medicare benefits, to understand why the supercommittee was only too glad to put off making difficult decisions.

My point here is not to say the parties negotiated in bad faith, or that the entire process was a charade. In fact, I think members in both parties hoped that they might get the other side to see it their way, at least enough to come to some type of agreement.  And, in truth, both sides were willing to make significant concessions.  Democrats agreed to make some budgets cuts, and Republicans did, if media leaks are to be believed, agree to some revenue increases, albeit primarily through changing the tax code. There were even reports that both sides had agreed on a plan to means-test Social Security benefits. But ultimately the ideological divide which undergirds Republican’s resistance to tax hikes and Democrat’s opposition to cuts in entitlement programs proved too big to bridge under the current political climate. No legislative procedure could overcome that political reality.

To be sure, both sides may yet negotiate a smaller face-saving agreement.  On Friday, Republicans reportedly floated a smaller $640 billion deficit reduction package that includes some revenue increases, and I wouldn’t be surprised to see Democrats leak their own mini-reduction package in response.  But I would be shocked if both sides suddenly agree to a plan that meets the $1.2 trillion target and avoids triggering the automatic cuts.

If, as I expect, the supercommittee fails to reach an agreement, both sides will engage in full-scale damage control and finger pointing, and the media will doubtless partake in another bout of handwringing about our “dysfunctional” Congress. But while that plays well with the public, I think it is probably the wrong message to take from the supercommittee’s failure. The debate over the budget is really a debate over political values and the future direction of the nation’s budgetary policy.  It is not a debate that should be resolved by legislative gimmicks that allow members of Congress to avoid making hard choices, and from being held accountable for those choices by the voters.  And, in fact, in the next several months legislators will face several more difficult decisions, including whether to extend unemployment benefits and whether to allow payroll tax cuts now in place to expire. In the meantime, legislators from both parties now have an opportunity to prepare their case in the run up to what is shaping up to be the most consequential national election in several decades.

There is no guarantee, of course, that the 2012 elections will send an unambiguous signal regarding how to address the nation’s budgetary woes. In the 2010 midterm elections, however, we saw how a grass-roots Tea Party movement rooted in opposition to government bailouts, increased spending and growing deficits produced one of the biggest partisan reversals in the post-World War II era.  More recently, similar anti-corporate sentiments spawned the “occupy Wall St.” movement which may yet develop into a potent electoral force.  Who knows how these sentiments will play out in 2012? With so much at stake, I’d rather take my chances with the electoral process than have members of Congress hide behind legislative gimmicks designed to provide political cover.

The supercommittee (apparently) has failed.  Let the real debate begin!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>