Wonkblog: Supercommittee

Supercommittee: Built to fail

Now that we know the supercommittee failed, one question is whether it ever had a chance. This post by Nolan McCarty suggests not.

McCarty tested every member of the supercommittee against a standard measure of congressional polarization. The Republicans on the supercommittee, he found, were significantly farther to the right, and the Democrats farther to the left, than the median member of their parties. He even ran an experiment where a computer randomly drew 12 members of Congress, six from each party, 1,000 times. Only 90 of the draws led to panels that were more polarized than the actual supercommittee. The supercommittee was built to fail, or at least to vehemently disagree.

The supercommittee ‘wish lists’

Politico has a postmortem on the debt-reduction supercommittee that reveals the “wish lists” the two sides exchanged in October:

House Republicans wanted to repeal Obama’s health care law, implement the controversial House GOP budget drafted by Rep. Paul Ryan (R-Wis.), save $700 billion by block granting Medicaid, cut $400 billion in mandatory spending, slash another $1.4 trillion in other health care mandatory spending, save $150 billion by slicing the federal workforce and put a $60 billion cap on tort reform.

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Why Republicans like Simpson-Bowles

I get at this a bit in today’s column, but one of the curious things about the GOP’s interest in Simpson-Bowles is that Simpson-Bowles has more in tax revenue and more in defense cuts than anything President Obama has proposed. It also, to be fair, has more in Social Security reforms and more in Medicare cuts than anything the president has proposed. Nevertheless, a traditional accounting suggests that the White House’s deficit-reduction offers have been well to the right of the Simpson-Bowles plan.

You can see this on the above graph, which uses numbers (pdf) from the Committee for a Responsible Federal Budget*. And yet the Simpson-Bowles plan has fans in the Republican Party. Why?

I think the correct answer to this is: Who cares? If a bunch of elected Republicans have decided they like what’s in Simpson-Bowles, and what’s in Simpson-Bowles is substantially better than what’s been in most of their budget proposals, then what possible downside could there be for the White House and the Democrats in pursuing the plan? If Republicans eventually balk at it, as Democrats suspect will happen, then at least it’s clear who was willing to compromise and who wasn’t.

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Obama slams Republicans, promises to veto efforts to lift trigger

(Carolyn Kaster - Associated Press)
In an unusually firm statement this evening, President Obama responded to the supercommittee’s failure to reach an agreement. First, he said, the blame lies with the Republicans, who were unwilling to consider a package that balances spending cuts with revenue. Second, he said, he would veto any efforts to lift the trigger. “There will be no easy offramp,” he promised.

His remarks had a few different audiences. What markets heard was that the White House remains fully committed to the $950 billion in discretionary-spending cuts agreed to in the debt-ceiling deal and to the $1.2 trillion in automatic spending cuts that the Budget Control Act promised would follow an admission of failure from the supercommittee. If any ratings agencies out there were getting antsy, they’re probably calmer now.

What Republicans heard was that the president has little interest in cutting a deal with them — or, at the least, little faith that such a deal is possible. Either way, the White House has moved on to campaign footing. The president’s comments weren’t designed to smooth the way for a compromise with the GOP. They were designed to help the president defeat the Republicans in the coming election.

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The good and the bad of the debt supercommittee’s failure

So the supercommittee? Not so super, it seems. It’s ready to admit defeat. And some think that’s for the best.

Here’s their argument: A bad deal can be worse than no deal at all. And over the last few weeks, the deals offered by both sides were bad deals. They cut too deeply into some areas of government -- like the education, transportation and competitiveness programs in the “non-defense discretionary spending” category -- and did too little on taxes, entitlements, and defense.

Perhaps worse, a bad deal now would make it harder to reach a good deal later. Most economists think we need about $4 trillion of deficit reduction over the next decade or so. There’s a good chance, if the economy doesn’t begin to improve more rapidly, that we need a lot more. There’s little chance that we need a lot less. By the end, the supercommittee was discussing a $1.2 trillion deal. If you add in the spending cuts already agreed to in the debt-ceiling deal, that’s a $2.1 trillion deal. That would have left trillions in deficit reduction undone.

And the trillions it would have left would be in the hardest categories to reach agreement on. Taxes. Entitlements. Defense. Reaching a deal on those items is going to be difficult under the best of circumstances. It will be even harder if all the low-hanging fruit is already picked. If the supercommittee can’t reach a big deal now, better they should give up and go home rather than making it harder for Congress to reach a big deal later.

But before you celebrate the supercommittee’s failure, it’s worth hearing the other side, too.

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Supercommittee Rashomon

According to the supercommittee’s Democrats, the Republicans just offered a deal that paired $542.7 billion in spending cuts with $3 billion in tax increases. So the ratio of spending cuts to tax increases is approximately 180:1, and 214:1 if you count interest savings.

According to the Republicans, they offered Democrats a deal that paired $229 billion in “fees, sales and taxes” with $316 billion in spending cuts and $98 billion in interest savings. The Democrats, they say, are counting “fees and sales” as spending cuts rather than tax increases.

Either way, Democrats rejected the deal.

The Bush tax cuts are tripping up the supercommittee

(Center on Budget and Policy Priorities)
On Wednesday night, Michael Steel, John Boehner’s spokesman, e-mailed reporters to quash talk that the supercommittee’s Democrats had presented Republicans with another counteroffer and that the ball was now in the GOP’s court.

“This particular conversation was a step backwards,” Steel wrote. “It would lock in the largest tax hike in history – at least $800 billion - and then add an additional $400 billion in job-killing tax hikes without pro-growth tax reform, plus more than $300 billion in ‘stimulus’ spending.”

Democrats were agog. There’s no $800 billion tax increase in their proposal, they said. Their plan calls for $400 billion in new revenues -- close to the levels Republicans had pitched earlier. When I circled back to Steel, he explained his note more clearly. “They now plan to extend the current tax rates?” He replied. “That’s big news!”

To understand what Steel is saying, you need to understand that Republicans are trying to use the supercommittee as a vehicle to extend the Bush tax cuts, and how that’s making it much harder for the supercommittee to reach a deal.

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Defusing the trigger won’t be easy

Rep. Jeb Hensarling (R-Texas), center, joined by Rep. Xavier Becerra (D-Calif.) left, and Sen. Rob Portman( R-Ohio), right, arrive for the start of the opening meeting of the Joint Select Committee on Deficit Reduction or "supercommittee.” (J. Scott Applewhite - AP)
It’s not exaggerating to say that the entire theory of the supercommittee rests on the presumed fear of the trigger. If the two parties fear the trigger, they have a reason to make a deal. If they don’t fear the trigger, then there’s no reason that this committee should be expected to do any better than any of the other bipartisan deficit-reduction committees we’ve seen over the last two years. And the other committees have all failed.

But right now, there has never been less fear of the trigger. Even Rep. Jeb Hensarling, the Republican co-chair of the supercommittee, is talking about modifying it in the event the supercommittee can’t come to an agreement. By doing that, he’s making it less likely that the supercommittee does come to an agreement, which might say something about how much Republicans actually want this process to succeed.

Hensarling’s office did not respond to a request for comment, but other offices involved in this process did. And they made a fair point: The trigger might be harder to defuse than people think. In fact, it might be almost as hard as coming to a deal in the first place.

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