Will the deficit-reduction supercommittee come up with a plan or a plan to put off the plan?

By MARCELLA S. KREITER, United Press International  |  Nov. 20, 2011 at 4:29 AM
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The big question looming over Washington this week is whether the supercommittee will be able to fulfill its mandate to come up with $1.2 trillion in cuts to the budget deficit in the next decade or whether draconian measures adopted this summer will kick in.

The smart money is on kicking the can down the road with some agreement likely and the bulk of the cuts to be identified later by the committees considering various appropriations measures.

It's politics as usual in Washington, with little sign the partisan backbiting will ease any time soon.

"The folks on the supercommittee represent accurately their respective parties' lines in the sand," University of Illinois tax expert and law Professor Richard Kaplan observed. "The issue of trimming the deficit -- no one's even talking about reducing the already-accumulated debt -- is not rocket science. It takes a small amount of willingness to compromise, but that will not happen until the politicians fear for their job security from failing to trim the deficit more than from doing something their base does not want. When even [Sen.] Dick Lugar [R-Ind.] can face a primary challenge, there will be few profiles in courage."

Let's review:

The supercommittee was appointed following the Aug. 2 passage of the Budget Control Act of 2011 that allowed an increase in the debt ceiling -- an issue that promoted bitter partisan squabbling that sent the stock market reeling and resulted in a downgrade of U.S. sovereign debt. The bipartisan panel was given until Wednesday to come up with a deficit reduction plan -- actually only until Monday since there's a 48-hour period needed for the Congressional Budget Office to score the measure.

The panel is split evenly among Republicans and Democrats and between the GOP-controlled House and Democrat-controlled Senate -- the perfect recipe for gridlock. Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Texas, were named to the chairpersons. On Murray's side are Sens. Max Baucus of Montana and John Kerry of Massachusetts, and Reps. Xavier Becerra of California, Jim Clyburn of South Carolina and Chris Van Hollen of Maryland; on Hensarling's side are Sens. Jon Kyl of Arizona, Rob Portman of Ohio and Pat Toomey of Pennsylvania, and Reps. Fred Upton of Michigan and Dave Camp of Michigan. To complicate things further, Hensarling said the Democrats on the panel are divided in their approaches.

The committee has a relatively untried mandate: Its proposals must be adopted or rejected as a whole -- with no filibusters or amendments allowed.

Will they deliver a turkey for Thanksgiving or a workable plan that brings spending back in line with revenue?

"Of course, there is no guarantee that this supercommittee route will prove successful or that Congress will not change the new statute's implementation timeline. But we will find out in fairly short order," Kaplan said.

There are numerous reasons behind the problem.

When Bill Clinton left office in 2000, the U.S. budget was running a surplus that could have paid down the debt, which topped $15 trillion last week. Among George W. Bush's first acts as president was to cut taxes. Then came Sept. 11, 2001, and the ensuing military operations in Afghanistan and Iraq that have cost the United States billions and were funded outside the regular budget mechanism. And there are the growing entitlement program obligations -- a problem that has been recognized for decades but never adequately addressed.

University of Maryland economist Peter Morici also blames wrong-headed trade, energy and regulatory policies that hamstring U.S. companies.

The tax cuts, which have been extended several times, are now set to expire at the end of 2012. If they are extended again, budget cutters will have to come up with $3 trillion in cuts, Kaplan noted. Scheduled Medicare reductions fall in the same category. If the moratorium on cuts in payments to providers is extended, budget cutters will have to come up with that much more elsewhere.

How to pay -- revisions in the tax code to eliminate loopholes? Changes to tax rates? New taxes?

"The supercommittee can decide to offer tax changes, including rate increases, as part of its deficit reduction proposals, but the committee is not required to do so," Kaplan said.

"Tax overhaul has been studied to death. We have the solutions in hand, but the parties have irreconcilable objectives in this area. Even if a complete overhaul would take more time than is available now, the supercommittee could make some major strides."

If the committee fails, the August budget deal requires the automatic cuts to come from discretionary and defense spending, a prospect that has Defense Secretary Leon Panetta worried.

"The impacts of these cuts would be devastating," Panetta said in a letter last week to Sens. John McCain, R-Ariz. and Lindsey Graham, R-S.C. "Rough estimates suggest after 10 years of these cuts, we would have the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history."

White House deputy press secretary Josh Earnest said last week President Obama has mostly left the committee to its own devices but has cautioned members not to shirk their responsibility.

"The president called [committee members Nov. 11] … to deliver a very clear message that the supercommittee should not be engaged in an effort to try to look for ways to get out of the trigger ... [or] undo the accountability that was put in place to ensure that the supercommittee and that Congress as a whole would act to do something serious about reducing our deficit …," Earnest said.

"It's the responsibility of the supercommittee to … bite the bullet, to make these difficult decisions. It's what the American people expect."

Obama has been pushing what he calls a "balanced" approach, a combination of tax increases or tax code revisions coupled with spending cuts.

Last week, there were some glimmers of hope. Sen. Tom Coburn, R-Okla., one of the Senate's more fiscally conservative members, indicated the GOP might be willing to budge on its no-new-taxes stance.

Coburn released a report that found 1,500 millionaires paid no federal income taxes in 2009 and millionaires enjoy some $30 billion in tax breaks and federal grants annually.

"From tax write-offs for gambling losses, vacation homes and luxury yachts to subsidies for their ranches and estates, the government is subsidizing the lifestyles of the rich and famous. Multimillionaires are even receiving government checks for not working," Coburn said in a statement quoted by The Hill.

By the end of the week, the GOP no-taxes stand appeared to be cracking further, with Hensarling pushing $300 billion in new revenue and Sen. Lamar Alexander, R-Tenn., saying there's more at stake than party doctrine.

"It's about whether the president and the Congress can competently govern, about whether we can face up to the biggest problem facing our country and, working together, can we solve that problem?" The Washington Post quoted Alexander as saying.

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