The Supercommittee Spectacle: A Short History of the Deficit Wars
Another deficit commission up, another deficit commission down? Here we go again ... again.
REUTERS
The congressional "supercommittee" created in August to cut the deficit is six days away from failing and triggering a deep and automatic $1.2 trillion cut to defense and domestic programs. The primary reason for this stalemate is that Republicans have refused tax increases and additional stimulus; although Democrats have also resisted deep cuts to entitlement programs like Medicare and Social Security.
The impending collapse of the deficit-reduction group isn't an isolated failure. It's the latest chapter in a two-year saga on Capitol Hill that has consistently, inevitably, produced nothing that resembles long-term fiscal reform.
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Here is a short history of the Deficit Wars of 2009-2011. Two years ago, in December 2009, Sens. Judd Gregg (R) and Kent Conrad (D)* proposed a bill to create a commission to reduce the deficit. But Democrats worried the commission would cut entitlements; meanwhile, the GOP was concerned that the commission would raise taxes. So in January 2010, the bill was voted down by a group of senators that included several Republicans who initially cosponsored the bill.
In February, President Obama created his own deficit commission, co-chaired by Alan Simpson and Erskine Bowles, by executive order. In December, the commission released its final report. It fell short of the supermajority needed to send its recommendations to Congress for a vote.
And so, in January 2011, after an election that delivered a much more conservative Congress, Washington was back at square one -- this time with a House that demanded spending cuts at every turn. A budget showdown in April nearly shut down the government. A budget showdown in August nearly ended in technical default over our debt ceiling. September produced its own mini-crisis. (A Google search for "2011 'budget showdown'" returns 6.7 million articles.) But 18 months after the December commission bill debuted, Congress wasn't any closer to meaningfully reducing the deficit.
In August, Washington had drawn two tactical lessons from the Deficit Wars, so far: (1) Commissions insulate responsibility; and (2) Deadlines trigger action. So the August debt ceiling deal created yet another commission to reduce the deficit -- the "supercommittee" -- and devised a "trigger" that would automatically make $1.2 trillion cuts if the supercommittee failed again.
It's six days away from failing again.
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The biggest lesson from the Deficit Wars isn't tactical. It's ideological.
In late 2009, Democrats didn't want to cut entitlements, and Republicans didn't want to raise taxes. Two years and so much tactical jiggering later, Democrats still don't want to cut entitlements and Republicans still don't want to raise taxes. The threat of a government shutdown didn't change that. Neither has the threat of a deep cuts to defense and domestic spending. Our Congress: Such limitless energy for manufacturing crises with make-believe triggers, and such stingy appetite for doing things.
The solution to our long-term debt problem is, to repeat, cheaper entitlements and more taxes. This isn't my opinion so much as a mathematical fact. The part of the budget growing faster than GDP is almost entirely entitlements. We have to cut where the growth is. But there's no reason to cut deeply into Social Security or Medicare when returning to Year 2000 tax rates would raise $4 trillion over ten years. Moderate changes on both ends would put the U.S. on a sustainable path -- and even pay for another short-term stimulus.
The short-term should not get short shrift. A large, rich country cannot have a debt crisis without a growth crisis. The most important metric for sovereign fiscal health is the debt-to-GDP ratio, after all. A healthy-growing U.S. economy that expands faster than it borrows should never have anything resembling and a debt crisis. That suggests that we should focus on getting growth going before we start taking money out of the economy. But if Congress has no appetite for deficit reduction, it has a mortal allergy to stimulus.
It has become tiresome to say that Congress is broken, but like so many cliches, it's hackneyed mostly because it bears so much repeating. A new Congress would be a nice thing to have. But that sounds pretty complicated. Somebody ought to make a commission.
*Updated.
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