Can the super-committee deliver deficit reduction?
8/7/2011Hello, MasterCard? I’m calling to let you know I won’t be paying my bill this month ...
Why not? Well, my wife and I have been fighting about our spending, and I need to show her who’s boss. But I know you won’t wreck my credit when I don’t pay the bill, because this is a matter of principle ...
What are you laughing at?
After President Obama signed the debt-limit deal, U.S. stock prices fell to their lowest level in almost three years. So much for reassuring investors and job creators about preserving the strength of the American economy.
Other factors were at work — an unexpected drop in consumer spending, a global economy that again is weakening, a domestic unemployment rate that has barely budged in 29 months. But the judgment of the markets, like that of many other observers, appeared to be that aside from avoiding an immediate default, the new agreement to raise the federal debt ceiling doesn’t resolve anything.
For all the hostage-taking brinkmanship that preceded it, the deal is designed to allow Washington to evade rather than fulfill its duties to taxpayers. That began with the phony insistence on tying the previously routine act of increasing the debt limit to an attack on federal spending, creating an artificial political crisis.
When did refusing to pay your debts become an expression of fiscal responsibility? At the time of the real Tea Party, that would have gotten you tossed into prison.
Today’s self-appointed tea-stained patriots don’t expect to be held accountable for their actions. They expect the rest of us to pay their ransom demands — and so far, that strategy is working.
As the debt-limit debate dragged on, it became clear that Republicans’ highest priority was not slashing the deficit or getting the federal budget under control, but rather protecting the economic privileges of the wealthiest individuals and corporations at all costs. And if they could make Mr. Obama look weak in the bargain, so much the better.
The President had agreed to a deficit-reduction target nearly twice as large as the new deal calls for. Yet GOP lawmakers refused to consider any plan that would increase revenues, even in exchange for spending cuts worth three times as much. House Speaker John Boehner of Ohio started to talk about such a grand bargain with Mr. Obama, until the extremists in his caucus reminded him who calls the shots.
The bipartisan plan proposed by the “Gang of Six” senators actually would have reduced personal and corporate income tax rates in return for closing tax loopholes — credits, deductions, exemptions, and other breaks in the federal tax code that often benefit special interests with no discernible public gain.
Republican lawmakers portrayed the closing of such loopholes as tax hikes. Instead, the breaks identified for elimination are a big source of wasteful federal spending, which the party claims to abhor. But the simplistic Frankenstein’s-monster mantra “Tax — bad!” is so much easier to say.
It’s not surprising that Republican lawmakers again would fight hardest for the people who bankroll their campaigns, as they did during the brawl last year over the George W. Bush tax cuts. They’ve learned their lessons well in other respects; several House GOP freshmen who pledge allegiance to the Tea Party already are among the fiercest champions of pork-laden budget earmarks for their districts.
But it’s more baffling that so many voters who don’t benefit from the tax breaks and distortions — who, in fact, subsidize them with their own taxes — continue to support these priorities so vehemently.
So now a “super-committee” of lawmakers from both parties and both houses of Congress is supposed to deliver — and then sell to their colleagues and the President — $1.5 trillion in additional spending cuts, on top of the $917 billion in reductions the debt-ceiling deal mandates over the next decade.
The idea is that these solons, away from the pressure of this month’s manufactured crisis or next year’s re-election campaign, will look soberly at such big issues as tax fairness, the growth of health care costs, Pentagon spending, and changes to benefits programs such as Medicare, Medicaid, and Social Security. Then they’ll provide the budget compromise that has eluded the parties.
It’s nice to think so, but we’re more likely to get served a turkey at the committee’s Thanksgiving deadline. Republican lawmakers already are warning their leaders not to put anyone on the committee who would consider raising taxes or even closing loopholes. Democrats are nearly as wary about discussing cuts in entitlements.
If the committee doesn’t produce a workable agreement, the new budget law calls for $1.2 trillion in automatic, across-the-board spending cuts. That could mean havoc for the Pentagon and Medicare providers, among others. And even then, the national debt is projected to grow by $9 trillion over the next decade.
More likely, the pols will find a way around the trigger device, as they have evaded similar efforts at mandatory budget discipline in the past. Either way, they will have spared themselves again from making tough choices and taking responsibility.
Even that might be tolerable — barely — if Washington could get past its partisan obsessions and take meaningful action to get Americans back to work, But because such a course might require a degree of deficit spending, it’s off the table as well.
Meanwhile, Congress faces a Sept. 30 deadline to enact spending bills that will keep the government running. Shutdown threat, anyone?
David Kushma is editor of The Blade.
Contact him at: dkushma@theblade.com