If the congressional “supercommittee” cannot agree on a plan to tame the federal debt by next week’s deadline, as now appears likely, here’s what will happen: nothing.
The automatic spending cuts that were supposed to force the panel to deliver more palatable options would not take effect until January 2013. That leaves lawmakers a full year to devise alternatives.
The absence of an imminent crisis helps explain the lack of urgency on Capitol Hill this week, despite a Thanksgiving deadline approaching. With a vast ideological gulf separating the Republican House and the Democratic Senate on taxes and social spending, a mere deadline may no longer be enough to spur compromise. Over the past year, Congress has needed the threat of full-scale chaos to force action.
An impending government shutdown forced the first budget deal, in April. The risk of the nation’s first default on its debt forced the second deal, in August. The supercommittee, created as part of the debt-limit agreement, was designed to avoid that kind of cataclysmic backstop.
As a result, hope for an agreement appeared all but lost Thursday. Even normally optimistic aides close to the process conceded that it may be time to pull the plug. Sen. Max Baucus (D-Mont.), who has worked as hard as any of the 12 supercommittee members to reach accord, was dour in an interview and highly critical of his colleagues in Congress.
“We’re at a time in American history where everybody's afraid — afraid of losing their job — to move toward the center. A deadline is insufficient,” he said. “You’ve got to have people who are willing to move.”
As he spoke, Baucus grew angrier and more emotional, invoking the memory of his nephew and more than 4,000 other Americans who have died in the Iraq war.
“Compared with the thousands who have given their lives in service to this country, I think it’s tragic and it speaks volumes” that politicians in Congress and the White House are “too worried about their jobs in order to reach an agreement,” Baucus said. “Because if we could reach an agreement, it’s going to upset a lot of people on both sides. But not enough people are willing to do it, even though it would be the right thing for the country.”
Talks continued to limp along Thursday, with the panel’s Democrats and Republicans spending another day in separate meetings. A bipartisan group gathered briefly Thursday evening, but there was no immediate sign of progress.
If the supercommittee fails, many lawmakers and senior aides say a debt-reduction deal is unlikely to be completed until after the November 2012 elections. That’s when Congress will face the prospect of not only unprecedented cuts to the Pentagon and other agency budgets, but also the expiration of George W. Bush-era tax cuts — an outcome that would raise taxes for virtually every American in January 2013.
Some Democrats say they would have more leverage to force Republicans to consider taxes as part of a debt-reduction deal as that tax increase — one of the largest in U.S. history — drew closer. Republicans, aware of that tactical disadvantage, have fought to extend the Bush tax cuts as part of supercommittee negotiations.
The next budget battle probably would start long before next fall, however. Some Republicans, such as Sen. John McCain (Ariz.), have vowed to draft legislation that would prevent $54 billion in cuts to the Pentagon that are scheduled to begin in January 2013, a move Democrats have vowed to oppose.
Meanwhile, Democratic members of a group of moderate senators known as the Gang of Six met Thursday evening with House Minority Whip Steny H. Hoyer (D-Md.) to talk about reviving a debt-reduction plan that would tackle all the biggest drivers of future borrowing and stabilize the debt as a percentage of gross domestic product by the end of the decade.
The federal debt reached $15 trillion this week, exceeding the nation’s annual economic output for the first time since World War II.
Sen. Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate and a member of the Gang of Six, said Congress must deal with that problem long before the 2013 cuts — known as the “sequester” — begin. “And I’m not talking about changing the sequester. That’s a rush for the exits by people who are frightened,” he said.
“I’m rooting for the supercommittee. I support the supercommittee. I don’t want to suggest that I have a better way to do it,” Durbin said. But “this is a very dangerous climate we’re in, both in Europe and here. With so many people out of work and so much uncertainty at this point. . . . We need to do something right now to create jobs. And we need to have a credible plan that the world accepts, the financial community accepts, to deal with the deficit. That, to me, is the two-step here.”
Interest groups on both the right and the left have begun to promote the sequester as a preferable alternative to a debt-reduction deal that would target favored programs. The sequester was designed to be painful to both sides, split evenly between defense spending, which Republicans have traditionally protected, and domestic initiatives, which Democrats are loath to cut.
But for the anti-tax groups that form the core of the conservative base, the automatic cuts would be better than any deal that included tax increases.
“We promised cuts. And I think we need to have cuts,” said Sen. Rand Paul (R-Ky.).
For some liberal groups, the trigger is better than a bipartisan deal that would cut health and retirement programs. Although the sequester would strike hard at agency budgets, spending for the poor and the elderly — including food stamps, Medicaid and Medicare benefits — would be exempted.
“All of our groups are very well united around the idea that no deal is better than a bad deal,” said Eric Kingson, co-director of the Strengthen Social Security Campaign. “At least if you have no deal at this point, there’s time to step back and talk about it as a nation and think about the alternatives.”
Baucus predicted that if the supercommittee fails, the next year will be dominated by partisan bickering aimed at gaining a political advantage before the 2012 elections.
“Both sides are going to offer all kinds of message amendments. It’s just going to be, probably, unpleasant. And probably unproductive,” he said.
Meanwhile, aides in both parties turned their attention to the politically sensitive matter of stage-managing the panel’s demise. Should each side present its own debt-reduction proposal for a vote in a final public hearing? Or should they merely concede that the process has failed on Monday, the legal deadline for making a plan and a cost estimate public?
One Democratic aide, speaking on the condition of anonymity to candidly discuss the prospect of failure, said: “I would think that there has to be some kind of period at the end of this sentence.”
Staff writer Paul Kane contributed to this report.