The Supercommittee's Worst-Case Scenario

By Chris Good

Caught between the untenable and the unlikable, a dozen members of Congress face the prospect of throwing Washington into chaos

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As a symbol of government dysfunction, the deficit supercommittee has succeeded gloriously.

Its basic premise, which arose from the summer's debt-limit stalemate, is that President Obama and congressional leaders could only agree on the fact that they could not agree. We can't decide what to do about deficits, they said, so let's make these other guys decide later. As solutions go, it wasn't one.

It's easy (and fun!) to look on the supercommittee cynically, but the idea could in theory actually work. If the six Republicans and six Democrats can agree on a plan, the supercommittee will look like a brilliant instance of managerial delegation.

That's what all hope for. The other possibility, of course, is that the supercommittee will fail, just as the process that preceded it did.

If it does, what form might that failure take -- and what will the policy and political consequences be?


The Somewhat Bad Scenario Many Would Like to Avoid: "Sequestration"

"Sequestration" is kind of an ugly word, despite its resemblance to "Sea Quest." Fitting, then, that it's what will happen if the supercommittee can't agree on a deficit-reduction plan.

What it means: If the committee can't agree on an approach by the Thanksgiving Holiday, that failure would automatically trigger an across-the-board cutting process to eliminate $1.2 trillion. This would seem like something deficit-reducing GOP House members could get behind, but remember -- these would be across-the-board cuts and would dig into defense funding that the GOP wants to preserve as well. The whole concept of sequestration was designed to encourage the committee to reach agreement or face consequences neither party likes.

Here's how it could go down: The committee has until Nov. 23 to approve a plan that reduces the deficit by at least $1.2 trillion over 10 years. Right now it's still up to the panel members how they do it: Cut spending or raise taxes -- it's their choice. If they can't agree on a plan, sequestration automatically follows by law.

The cutting would be mandated and automatic, with little flexibility. Some programs would be exempt -- Medicaid, Social Security, food stamps, the Children's Health Insurance Program, the Earned Income Tax Credit, veterans' benefits, and federal retirement, for instance -- but some defense programs like war funding would take a 9-percent hit, compared to current spending levels.

Here's how the independent Center for Budget and Policy Priorities (CBPP) breaks down the cuts:

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It's unclear which programs would get cut the most: The Budget Control Act, which created the supercommittee and delineated the cuts outlined above, does not specify which individual programs will lose money -- only which agencies. The administration and congressional appropriators will have to figure it out.

Medicare might be the ugliest area of cutting: It would take the biggest hit of any mandatory, nondefense spending program, according to the CBO, although about 10 percent of Medicare would be exempt from cuts, while the remaining 90 percent would be limited to 2 percent in yearly spending reductions. So says the CBO:

The CBO estimates that mandatory spending will account for roughly 58 percent of all nondefense spending that would be subject to enforcement procedures under the Budget Control Act during those nine years. Of that nonexempt mandatory spending, the vast majority is for Medicare programs and activities that would be subject to the 2 percent limit. In the absence of such a limit, reductions in budgetary resources for Medicare would total $256 billion between 2013 and 2021, CBO estimates; with the 2 percent ceiling, however, such reductions would total $123 billion over that period.

There's a silver lining for Medicare recipients, in that premiums would drop for Medicare Part B (medical coverage), costing the government $31 billion through 2021.

Farm subsidies would take a big hit. CBPP says they, not Medicare, would see the worst of it: "About $5.2 billion in cuts in the other mandatory programs that are subject to sequestration, the biggest of which is farm price supports," the group writes. The war-funding cuts outlined in CBPP's chart would, undoubtedly, make some people nervous.

Bottom line: Should sequestration happen, get ready for an algae-bloom of stories about what appropriators and the administration would consider cutting. Other than Medicare, major vital programs for vulnerable constituents would be protected, but we'd read stories every day about education grants and the like getting the axe.

Making cuts will be no fun, and legislators could cut less by raising taxes on the rich -- a broadly popular idea that Republicans vehemently oppose, saying it's a bad idea to raise taxes on anybody, even the one percent, during economic hard times. There has been little movement on this front.


The Potentially Even Worse Scenario That Would Make Everyone Feel Distraught About Washington's General Functionality

The cuts wouldn't be fun, but there's a scenario that might be even worse. It's possible Congress will try to wriggle out of the automatically-triggered cuts, creating an even greater crisis of confidence than already exist in the federal government's ability to uphold its commitments and fulfill the promises made in August that temporarily resolved the debt-limit stalemate.

This past weekend, supercommittee member and fiscal conservative Sen. Pat Toomey (R-Pa.), floated that possibility in a "Fox News Sunday" interview:

"I think a lively debate will occur" over whether to allow the automatic cuts take place -- so-called sequestration -- despite President Obama's insistence on Friday he would not go along with any attempt to turn them off.

Toomey said that "in the very very unfortunate event that we don't, I think it's very likely that Congress would reconsider the configuration of that sequestration, and consider is this really the best way to do it?" Toomey said.

President Obama has said he doesn't see this as an option, warning the supercommittee members on Friday not to try to undo the Budget Control Act and avoid sequestration. Senate Majority Leader Harry Reid also opposes this outcome, saying this week that "those who are -- who talk about retracting the sequester are wrong, are not living up to the agreement we reached to cut our nation's deficit last July." Senate Minority Leader Mitch McConnell wouldn't say whether he thinks sequestration could be skirted, ABC reported.

While the 12 unfortunate members could maybe pass a resolution giving themselves more time, the possibility of sequestration -- and the question of whether or not to simply ignore it -- would persist.

Should Congress and the president go back on their self-imposed consequences and deadline, it's tough to even describe how much credibility Washington would lose.

More to the point, this possibility has the makings of a terrible political fight, pitting President Obama (and congressional leaders) against a faction of lawmakers not wanting the cuts to happen. Ultimately, the responsibility will fall to Obama to order sequestration into effect. This is how the Budget Control Act was written:

(8) IMPLEMENTING DIRECT SPENDING REDUCTIONS.--On the date specified in paragraph (4) during each applicable year, OMB shall prepare and the President shall order a sequestration, effective upon issuance, of nonexempt direct spending to achieve the direct spending reduction calculated pursuant to paragraphs (5) and (6). When implementing the sequestration of direct spending pursuant to this paragraph, OMB shall follow the procedures specified in section 6 of the Statutory Pay- As-You-Go Act of 2010, the exemptions specified in section 255, and the special rules specified in section 256, except that the percentage reduction for the Medicare programs specified in section 256(d) shall not be more than 2 percent for a fiscal year.

Imagining the truly worst-case scenario requires stretching one's mind to accommodate all the political malfeasance of which Washington, collectively, is capable. Would some lawmakers deride the president for enacting the cuts? Would the president and leaders of both parties suffer a public backlash for standing by their word? The reasonable answer is no, but anything is possible. It's possible to imagine Congress and the president forced into a situation where both options -- enacting the promised cuts, and reneging on the promise of making them -- are unpalatable.

In the worst-case scenario, a political tragicomedy unfolds wherein the budget-and-debt debate never actually solves itself, but rolls on in a debacle where everyone is the bad guy, in one way or another. Congress reneges on its promises; Obama is forced to order a sequestration; budget-cutting is done by fiat rather than carefully by individual members; needed programs are badly undercut; and the public is dragged into yet another maelstrom of partisan discord that drains any remaining faith they might have in their government's ability to act to solve problems that need to be addressed.

Image credit: J. Scott Applewhite/AP

This article available online at:

http://www.theatlantic.com/politics/archive/2011/11/the-supercommittees-worst-case-scenario/248539/