Posted on 11/15/2011 6:47:08 AM PST by SeekAndFind
Partisan politics will make any meaningful deal difficult to reach.
The so-called Congressional supercommittee — a group of 12 politicians with the unenviable task of reaching a compromise on federal spending and our massive budget deficit — is running out of time.
And so are American consumers and investors hoping for a deal to bolster a struggling economy and prove the stock market rally is here to stay.
Only about a week is left for the group of six Republicans and six Democrats to craft a plan that will slash $1.2 trillion from the U.S. deficit during the next decade. If the debt committee can’t reach a compromise, deep and automatic cuts to Medicare and defense spending will trigger — which either individually or in tandem could be very damaging to an already ailing American economy.
For investors, the firing of these triggers certainly would spook Wall Street. Just look at the 500-point drop in the Dow after the U.S. credit downgrade for an example of how market-moving these kind of big-picture setbacks in Washington can be.
And as the Nov. 23 statutory deadline for the supercommittee approaches, Europe’s deepening debt problems only add to the pressure as investors are focused on politics even more than they are company balance sheets.
There is hope among the Capital Beltway crowd that the pressure-cooker of tense negotiations and high stakes will ultimately force both sides to realize the importance of a deal — even if it is a last-minute one. But the divisive nature of American politics makes most folks very skeptical.
And even if this group of 12 can reach a tenuous deal, there still is the very high hurdle of an up-or-down vote in Congress. The fallout of Election Day 2011 and a heated GOP presidential primary continues to show politicians are heavy on partisanship and light on compromise. That means even if the debt committee goes out on a limb with a pact that is unpopular to many Democrats and Republicans, the party base of either side could easily break that limb by trying to twist the debate more to the left or right to suit their respective bases.
To top it all off, any political agreement from Congress is just that — a political agreement. As a very insightful piece in The New York Times stated on Sunday, it’s not enough for voters and politicians to think they know what’s best. Those dealing in government debts hold a significant amount of power and will show how practical a solution truly is. As Alan Cowell wrote in the Times, “In Greece and Italy, as in Ireland and Portugal before them, unelected bond traders defined the destiny of elected leaders. By week’s end, the market jitters had spread to Spain and France.”
So in a nutshell, the supercommittee has to effectively solve the complicated problem of U.S. debt while catering to intransigent members of their political parties, overly emotional voters and risk-averse global financiers.
Is this all overly pessimistic? Maybe. But consider this: Congress itself thinks there is no way for the debt committee to succeed — and rather than deal with hard decisions or the harsh repercussions of inaction, Sens. John McCain and Lindsey Graham plan to introduce legislation to undo the Budget Control Act and let everyone off the hook.
Ideally this wouldn’t have to happen … but practically, it’s not a bad idea. After all, what’s worse: The automatic spending cuts, or validation that our do-nothing Congress has an utter lack of leadership?
America already has resigned itself to the latter.
Everybody’s playing chicken. Look for a breakthrough at the last possible minute.
Tie! Same second!
LOL!
If/when the Super Committee fails, guess who gets the blame.
Pubbies got out-snookered again. They hand the Dems another issue to use against them in next year’s election. Dems can blame sluggish/failing economics and stagnant job creation on them.
Newt was right with his assessment of the Super Committee: It was the dumbest idea to come out of Congress in a while.
At the last minute, they’lll move the goalpost...delay the decision and continue discussions until Christmas...then January. A re-run of the continuing resolutions.
PULL the damn plug already...
I've notice the Obama administration, through that idiot Leon Panetta have started the "crisis" drumbeat that if this super committee doesn't come up with a "deal" (a deal being, Republicans cave and agree to tax increases), that soldiers will be starving, war planes will be falling out of the sky and ships will be rusting in port. I fear that these scare tactics will peal off enough Republicans to get some turd sandwich deal that includes tax increases.
One small problem. There is no such thing as a ten year budget. I call B.S.
Prepper Ping is in order.
One way or the other, the result will be better economically (disregarding all other factors) for America than right now.
Markets should be neutral on this. I would think.
$1.2 trillion over a decade???? I must have been sleeping, I thought we were accumulating an annual debt of $1.5 trillion PER YEAR!!!!!
We’re toast....
To myself...so at the end of ten years (and if our spending/revenue remains the same - which it won’t!!!) we’ll accumulate an additional $13.8 trillion on top of our existing $15 trillion? ~$30 trillion in debt by 2022???
More doom and gloom? That is all some here see.
It was always going to fail. I pray to God it fails because its unconstitutional. Everybody should be calling their US congressman who voted for it and raise sand. I did it in a townhall.
We don’t sent 435 of these jerkwads up there to Capital hill to represent us so they can cede their power to 12 other jerkwads 6 of which are senators and shouldn’t be sitting on a committee to originate financial legislataion anyway.
When the debt obligation exceeds 20 times the total money in existance, what do you propose will stop such gloom and doom from coming to pass?
So in a nutshell, the supercommittee has to effectively solve the complicated problem of U.S. debt while catering to intransigent members of their political parties, overly emotional voters and risk-averse global financiers.
Overly Emotional Voters, eh? They don’t pay attention to us anyway. Why should they? Between vote buying and Voter Fraud they don’t need to. The honest and working citizens of the United States are the beasts of burden that they can continue to pile on until we are no longer able to work or are deceased.
If by “fail” they mean “succeed as planned by the ‘rats”, then yes. Dem’s will be tripping over themselves racing to the media to blame the “failure” on Republicans.
They aren’t going to reduce current spending. Instead they are going to reduce the rate of future spending growth.
They’re job is simple ... overestimate the projected spending growth for defense and entitlements, and then ‘cut’ the growth rate to what it really was going to be. That was easy!!
The trick is the Fed is covering up the problem with little debt service.
If interest rates ever are allowed to be where they should be then we are Greece.
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