Deficit panel is no supercommittee
Don’t expect much substance
By Patricia Mohr
Monday, Sept. 5 - This week the new deficit panel—often hyped and typed as “the supercommittee”—is scheduled to meet to begin its search for more than a trillion dollars in savings from the federal budget. The public is expecting big results. The thinking is if you put six Democrats and six Republicans in a room together long enough and give them reason enough to act, they will agree to something. The trouble is, the incentive turns out to be rather weak, and the committee is not so intent on reaching its goal.
For starters, the trigger mechanism meant to encourage committee members to produce a plan has pretty sizeable holes in it. No doubt, it looks good at first sight. The debt-limit bill, signed into law last month after much noise and wrangling, says an automatic across-the-board spending cut of $1.2 trillion will take place if the committee does not produce its own $1.2 trillion reduction plan. It is often hypothesized that neither Republicans nor Democrats would want this to happen.
The catch is in the legislative fine print: Automatic spending cuts won’t take effect until 2013—well after the next congressional election. That’s significant because it means it will have no effect on the current Congress. Furthermore, the incoming 113th Congress would be able to pass a new budget that negates the cuts. In effect, it puts the burden of making difficult decisions on autopilot, and the autopilot button can be shut off.
Second, panel members appear to have little motivation for a deal.
Remember, four of them—Democrats Sen. Max Baucus and Rep. Xavier Becerra and Republicans Rep. Jeb Hensarling, and Rep. Dave Camp—served on the Simpson-Bowles fiscal commission. When that commission reported its recommendations late last year, all four members rejected the final product, citing irreconcilable differences over tax reforms and President Obama’s new health care law. All signs suggest they only hardened those positions during debt limit battle this summer.
As if those factors were not enough to make the deficit-reduction panel sink into oblivion, Friday’s jobs report added a final weight to push it toward freefall. The unemployment rate held steady in August at 9.1 percent as 14 million Americans remained out of work.
Indeed, the focus has shifted to jobs, and that means Congress will start talking seriously about a jobs package beginning Thursday night with President Obama speech. Note, even though Republicans will likely reject much of Obama’s plan, there is nothing seasoned politicians like more than the idea of a “stimulus” bill. It provides the opportunity to promote old-time favorites, reward loyal lobbyists and show voters you are doing something — anything — to create jobs.
Sound familiar? It should. Remember that just as the Simpson-Bowles fiscal responsibility plan was facing defeat late last December, President Obama and Congress approved an $858-billion tax-cut-extension. Bait and switch? Perhaps. But it is always easier to agree to a deficit-creating stimulus bill than it is a deficit-reduction one. Expect a similar action this time around.
As for the deficit panel, it will offer more distraction than substance. One reason for optimism on the budget front, however, is that the debt-limit law included a legislative device to help the Senate pass funding bills without having set an overall framework. So hope is not lost; it just may be buried in another futile commission.
Patricia Mohr, a former Capitol Hill reporter for Tax Notes Magazine and Education Daily, now writes about the globalization for Mohr Media.