WHERE DO we go from here?
Assuming that the flawed but necessary deal to lift the debt ceiling passes the Senate following the House’s approval Monday, the attention — and pressure — will shift to the new super-committee whose mandate is figuring out how to save $1.2 trillion to $1.5 trillion more. The first round of cuts, spread among domestic and military programs, will total $917 billion over the next 10 years, including savings from lower interest payments, according to the Congressional Budget Office. The second round will be the harder, but more promising, part.
The 12-member committee will be a strange congressional creature, divided equally between the House and Senate, and equally between Democrats and Republicans. It can act by majority vote, and its proposals will enjoy a procedural highway straight to the Senate and House floors. Once there, they would have to be voted on, could not be amended and — of enormous importance in the Senate — could pass by a simple majority.
Nothing is off the committee’s table. In theory, it could recommend further cuts in discretionary spending; changes to entitlement programs, including Medicare and Social Security; and increases in tax revenue. In practice, achieving a majority promises to be excruciatingly difficult. The temptation for congressional leaders will be to name staunchly loyal and partisan members who will not dare stray from party orthodoxy: no tax increases for Republicans, no benefit cuts for Democrats. That would be disappointing, if not entirely surprising. This moment calls for the most able legislators from each party to come together and recognize that flexibility and compromise will be essential to crafting a final agreement.
The real incentive, of course, is the “trigger” mechanism to take effect if agreement proves elusive. If the committee does not produce $1.2 trillion in savingsand Congress does not enact them by Jan. 15, 2012, the consequence would take the form of automatic spending cuts. Of course it would have been better to adopt a balanced trigger of spending cuts and tax increases, but the cuts-
only trigger has elements to scare both parties.
Half the cuts would come from the defense budget, meaning reductions of about 8 percent in spending. A number of programs are shielded from automatic cuts. Some of these are sensible; Medicaid, food stamps and other low-income benefits programs have been protected from such trigger mechanisms in the past. Medicare benefits would not be subject to cuts, but Medicare providers could be cut at a level no higher than 2 percent of the program’s cost. Social Security is exempt from cuts, removing a significant incentive to avert trigger-pulling. In other words, the trigger has holes, but it might be scary enough that both sides will do what it takes to get out of the line of fire.
What would that look like? Administration officials say there is no acceptable way to reach the total entirely through spending cuts, and they believe that Republican negotiators will eventually come to realize this brutal mathematical fact, as House Speaker John Boehner (R-Ohio) tacitly did in the behind-the-scenes negotiations with President Obama. The potential interaction between the super-committee and the expiring Bush tax cuts, at the end of 2012, presents additional incentives to put taxes in the mix. Yet Republicans insist that tax increases are off the super-committee table. The history of showdowns on this issue does not produce confidence that Democrats will not blink once again and accept an all-cuts deal. The willingness of House Republicans to push the debt-ceiling drama to the brink does not augur well for a more compromising stance several months from now.
The daunting truth is that even if the super-committee produces an agreement, it will not be enough. The total savings, somewhere north of $2 trillion, are only about halfway of where the country needs to go to get the debt under control. Nothing prevents the super-committee from aspiring for more, and it may discover, as previous negotiators have, that a grander bargain is easier to achieve than a smaller one. That would be a welcome outcome, but it’s not one that anyone can count on. The political crisis may be averted for the moment. The fiscal crisis continues.