Gloom has descended on the work of the Joint Select Committee on Deficit Reduction (JSC) as the Nov. 23 deadline for its work nears.
As JSC Co-Chair Jeb Hensarling said over the weekend, cheap it has been a roller-coaster ride. Republicans have made offers; Democrats have made offers. Both long-term reform and short-term “kick the canister down the road” proposals have been floated and sunk almost as suddenly as they appeared. A variety of contortions using process and policies emerge and then submerge.
Despite all the sturm und drang, buy a simple fact remains. The JSC is very likely to produce the requisite $1.2 trillion in deficit reduction mandated by the Budget Control Act. Why are we mildly optimistic in the midst of the conventional wisdom of impending doom? Because finding $1.2 trillion off the “right” baseline isn’t really that hard.
Take the net $300 billion in revenues in the last Republican “offer,” add $100 billion each in additional cuts in the out-years for defense and non-defense discretionary spending, pump up the total with fees, minor changes in tax expenditures, a change in the CPI calculation for government programs and tax brackets, put in some cuts in provider payments in Medicare and assume some changes in Medicaid, take the “interest savings” such changes allegedly produce and you get real close to $1.2 trillion.
We suspect that the odds are on such an outcome.
If one notices the story in the Washington Post this morning one sees again the old device of taking credit for a baseline anomaly in defense spending. About $1 trillion in spending for defense operations abroad is in the CBO baseline. It wasn’t ever going to spent for those purposes. Yet, if the JSC decides to “cut” that $1 trillion, CBO will give it credit.
Forecast deficits under the CBO baseline will, indeed, decline by $1 trillion over 10 years. We have never doubted that some or all of those “savings” would be used, both to meet the $1.2 trillion goal of the JSC, but also to offset extension of Unemployment Insurance, “patching” the Alternative Minimum Tax, and incorporating the annual rejection of savings from Medicare providers.
One of the more intriguing questions has always been, will House Republicans support such a plan. After all, the option outlined above changes the national debt trajectory minimally during the next 20 years. The United States will still accumulate another $10 trillion or more in new debt during the next decade, leading to a debt-to-Gross Domestic Product ratio of more than 150 per cent.
What has happened to the “deficit hawks” of the Grand Old Tea Party?
Uniformly, we are told that three things haven’t happened that were forecasted by gloom-and-doomers.
First, nothing bad happened after the so-called debt ceiling debacle of August. Interest rates are lower now than they were then and the Dow Jones Industrial Average is higher.
Second, none of the 12 members of the committee have been hounded by their colleagues, urging them to act broadly or all hell will break loose.
Third, the party caucuses remain far from persuaded that it is in their political interests to tackle anything truly controversial with a very uncertain 2012 election year approaching.
Add to that the fact that most Members of Congress have serious ADHD tendencies, and you can see why anything demanding a view much longer than three months poses difficulties.
In the final analysis, “fiscal fatigue” afflicts Congress. “Enough already” seems the new rallying cry. After the CR mess for FY11, the debt ceiling drama, and another CR mini-soap opera for FY 12, members and staff are exhausted. They see no painless path forward; so, being humans, they choose a different path entirely—spend a lot of time home in your district or state, give rousing speeches and sign letters asking for fiscal sanity, even hold a big rally at the Capitol on Tuesday afternoon, and then vote for a balanced budget amendment to the Constitution. That should be enough cover for 2012 and maybe the economy will pull us out of hard choices in 2013.
We can rail and rant all we want at Congress, but its actions precisely conform to what most American voters want. No cuts to Social Security or Medicare, no tax increases, balanced budgets and more jobs—every poll reveals those preferences. And, under our Constitution, those members of Congress who most accurately reflect the wishes of their constituents who vote get re-elected.
As Cassius told Brutus as the plot to kill Caesar unfolded, “The fault, dear Brutus, is not in our stars/But in ourselves….”