Crucial week looms for deficit-reduction 'super committee'
This article first appeared in the St. Louis Beacon, Nov. 7, 2011 - WASHINGTON - The clock is ticking on the "super committee" set by Congress with the task of coming up with a $1.2 trillion deficit-reduction plan by Thanksgiving.
Whether the panel's final days end in an alarming failure, a detonation of partisan countercharges or the wake-up call of a deal that Congress can pass by Christmas will be clear by the time turkeys are being carved later this month.
"This opportunity will either be taken advantage of, or missed, within the next couple of weeks," said U.S. Sen. Roy Blunt, R-Mo., who still holds out hope for a deficit-reduction package. "The super committee has to get their potential action to the people who evaluate how much it's going to cost -- or how much it's going to save -- before Nov. 23."
Sen. Claire McCaskill, D-Mo., said she "remained optimistic" for a deal despite reports of a committee impasse. She regards last week's bipartisan letter signed by 100 House members as "a breakthrough" that may help.
That letter, signed by 40 Republicans and 60 Democrats urged the 12-member deficit panel -- the Joint Selection Committee on Deficit Reduction -- to agree on a broad package both to boost revenue and trim entitlements. It is a sign that some GOP members are willing to compromise on taxes.
"To succeed, all options for mandatory and discretionary spending and revenues must be on the table" for a deal, said the letter, which was signed by two Missouri lawmakers who often disagree: U.S. Reps. Jo Ann Emerson, R-Cape Girardeau, and Emanuel Cleaver, D-Kansas City. Although he did not sign, Rep. Russ Carnahan, D-St. Louis, told the Beacon that he "largely supports" the letter's message.
If the super committee is unable to reach a deal by Thanksgiving -- or if Congress is unable to pass the plan by Christmas -- the deficit-reduction law approved in August calls for $1.2 trillion in automatic spending cuts that would be triggered starting in 2013. Half those cuts would target the Pentagon and other national security programs.
With an initial Democratic proposal on the table, but some members concerned about a possible impasse, Republican leaders -- House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky. -- met with the panel's six Republicans to find some common ground late last week.
On Sunday, Boehner told ABC-TV's "This Week" that he "wouldn't describe [the super committee's current status] as an impasse," although he conceded that its members faced very difficult decisions. Boehner said he would "do everything that I can to ensure that the super committee is successful."
But there was growing pessimism in some circles. The second-ranking House Democrat, Rep. Steny Hoyer of Maryland, told reporters last week that "expectations for the success of the super committee are low," but did not rule out a last-minute deal.
Super Committee Deluged with Suggestions
During its public hearings, the deficit panel got some blunt advice came from the co-chairs of last year's National Commission on Fiscal Responsibility and Reform: former Sen. Alan Simpson, R-Wyo., and former White House chief of staff Erskine Bowles.
Simpson laid into "professional veterans" who demand bloated benefits, senior citizen "extremists" who oppose any cutback in Medicare, and Republicans who march in lockstep with anti-tax advocates such as Grover Norquist, president of Americans for Tax Reform, and refuse to consider even modest tax hikes."If everybody [in Congress] is terrified of the AARP and Grover Norquist, this country hasn't got a chance," Simpson told the Beacon last summer. "That's the reality; let's get serious."
Indeed, taxes -- often referred to as "revenue increases" -- and entitlements appear to be the kryptonite that has paralyzed the super committee so far.
Boehner said Republicans were open to "more revenues," but his method of gaining those -- by restructuring the tax code -- appears unlikely to become part of the deficit deal. "I believe that if we restructure our tax code -- where on the corporate side and the personal side, the target would be a top rate of 25 percent -- it would make our economy more competitive with the rest of the world," Boehner told ABC-TV on Sunday. "It would put Americans back to work. We'd have a broader base on the tax rules."
McCaskill, who holds out hope for a deficit deal, told the Beacon on Friday that the bipartisan letter was "a breakthrough" because it called for a balanced approach to address revenue as well as spending cuts. "It's the first time I've seen a bipartisan [congressional] group go public, that they're willing to compromise on all subjects. And that's going to be the key -- finding people willing to compromise on the entitlement programs and also on revenue."
McCaskill is among the lawmakers who want a major effort to cut the deficit. "Not only do we have to look at spending, which is a huge issue," she said. "But anybody who is honest has to acknowledge that we're not going to solve this problem just with spending cuts, unless you want to shut down the federal government entirely, which would mean no military and no highways and none of the things that make this country work.
"The fact is that folks are now willing to acknowledge that on a bipartisan basis we've got to look at revenue and we've got to look at the programs that people rely on, such as Social Security and Medicare. We've got to look at some reform in those programs, along with everything else."
Blunt says he also wants a package to lessen the deficit, but he tends to agree with most congressional Republicans that it should focus mainly on spending and entitlement cuts. He would also like to see a long-term approach to the nation's agriculture policy (see below).
But Carnahan -- who said he remains "stubbornly optimistic that the committee is going to come up with something that's significant and balanced" -- worries that the Republicans on the panel won't approve any significant revenue increases as part of the package. "I think most economists agree that cuts to programs alone won't get us where we need to be, in terms of bringing the deficit down and would disproportionately hurt low- and middle-income Americans," he said. "And I don't think that's fair."
The St. Louis congressman told the Beacon that the panel should "go after some of these tax loopholes.... Big oil companies are making record profits and don't need subsidies from American taxpayers. We should eliminate those subsidies."
Fear of Failure May Prod Action
They may not agree on the details of a deficit-cutting package, but most lawmakers agree that doing nothing would have serious consequences.
For one, such failure likely would heighten investors' concerns worldwide that the American political system is not capable of tackling its long-term deficit problems -- an inability that would be likely to slow U.S. economic growth.
"Everybody is concerned because there is a lot at stake," Carnahan said. "Just the act of [approving a deal] would also send some positive signals to the market and to consumers and to the big companies in America that are sitting on more than $1 trillion in cash that we would hope they would begin to invest."
Another concern is that failure to reach and approve a deal would further erode attitudes towards Congress and would pose serious risks for both political parties in the 2012 presidential and congressional elections. A large percentage of Americans say they are disillusioned by the partisan bickering in Congress.
Simpson told the Beacon this summer that failure by Congress to agree on a serious deficit-reduction plan could lead to backlash among voters. In his testimony to the super committee, Simpson warned again of such backlash. His co-chair, Bowles, said that he -- like many Americans -- fears that the panel can't get it done.
"I have great respect for each of you individually, but collectively, I'm worried you're going to fail --- fail the country," Bowles said. He and Simpson suggested a possible compromise to eliminate $1.1 trillion a year in earmarked spending and tax breaks, which Bowles said represented just "somebody's social policy."
Debate over Automatic Defense Cuts
Defense policy and funding are also looming large. Fearing the impact of large, across-the-board cuts in Pentagon spending that would result from a failure to approve a deficit deal, Republicans on both the Senate and House Armed Services Committees are drafting bills to divert those military cuts.
For example, Sen. Lindsey Graham, R-S.C., has said he would like to replace the military reductions with 5 percent reductions in other parts of the federal budget as well as a 10 percent cut in pay for members of Congress.
McCaskill, a member of Senate Armed Services, has not opposed a pay cut but says such efforts to protect the Pentagon from cuts are ill-timed, amounting to changing the rules in the middle of the game. "It's a very bad idea to remove the mechanism that may help us get a deal before this [super] committee's even finished its work. I think it's irresponsible to even talk about it at this juncture," she said.
"Obviously, none of us wants to in any way handcuff our military, in terms of being the best in the world. And we don't want to lessen their capabilities," McCaskill said. She added that the threat of automatic cuts "is really important in terms of instilling some kind of discipline in Congress."
Noting that "most of the Republicans voted for the sequestration," McCaskill asked: "Did they not mean it when they voted for it not very long ago? This approach was supported just a few months ago; for us to dismantle it now - I think Congress' approval rating would go to zero."
One Republican who voted against the August deficit bill that set up the super committee was Rep. Todd Akin, R-Wildwood, a senior member of the House Armed Services Committee and a candidate for the Republican nomination for U.S. Senate. He told the Beacon that he is very worried about the super committee and the possible impact of automatic cuts on the defense budget.
"I am concerned that such cuts would cause terrible destruction to the Department of Defense, to the point that they would be unable to accomplish a whole series of different missions that they plan for," Akin said. He added: "Not only is the amount that would be cut a disaster, but the way it would be cutting -- across the board -- would make it twice as bad."
Carnahan thinks such a change in the law is "very unlikely to happen" this fall. He said that "none of those [automatic] cuts would happen immediately. They would be set to go into effect in 2013, at the same time the Bush tax cuts are also scheduled to expire. Certainly, there would be an opportunity between now and then to make changes and adjustments. But we're still going to need to get the right balance."
So far, at least, Boehner says he does not like the idea of changing the mechanism for automatic cuts. "I would feel bound by it," he told journalists last week, conceding that automatic cuts are "ugly . . . because we don't want anybody to go there."
A member of the panel, Rep. Chris Van Hollen, D-Md., told the New York Times that Republican efforts to weaken the automatic-cut triggers "reflects a total lack of seriousness." Adding that such efforts would not be successful, he said they were "the result of people trying to escape the fundamental choices before us, and one of those choices is whether or not we are willing to end special interest tax breaks to pay for defense."
Will Super Committee Tackle Farm, Food Policy?
One of the most politically charged issues in deficit reduction is how to reduce farm and food subsidies that have been built into the system over many decades.
Blunt said that including a long-term farm policy in the super committee's package "probably creates more certainty for American agriculture than a protracted debate with lots of division between the House and Senate and all kinds of amendments."
Blunt told journalists last week that leading Republicans on the Senate Agriculture Committee have been giving advice to the super committee. "There would be some merit to American farm families to knowing what ag policy was going to be, and being able to take that certainty to the place where you borrow money and to the kitchen table when you make decisions about what you're going to do on the farm over the next few years."
Noting that farm policy is an extremely controversial issue in Congress -- with even "the Republican conference [having] two points of view about ongoing farm policy -- Blunt told reporters that he thinks "it's very unlikely that we'll get a multi-year farm bill any other way than through the super committee."
We should know within a couple of weeks, Blunt said. The Congressional Budget Office, which evaluates the real financial impact of all the policy changes, has told the super committee that it needs "some significant time to look at the potential agreement before the committee can actually vote on it."