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Supercommittee, Super Confusion (On taxes and spending, better to have no deal than a bad deal)
National Review ^ | 11/18/2011 | James Capretta

Posted on 11/18/2011 7:59:54 AM PST by SeekAndFind

As the November 23 deadline looms for the Joint Select Committee on Deficit Reduction — the “supercommittee” — to approve a deficit-cutting proposal or disband, the GOP again seems to be running the substantial risk of stealing defeat from the jaws of victory.

Recall that in the early part of the summer, House Speaker John Boehner was in the thick of negotiations with President Obama over the parameters of a “grand bargain” on the budget. The deal that was then under discussion would have required the GOP to agree to an $800 billion tax increase in return for Democratic support for entitlement reform.

If consummated, this deal would have been a political and substantive debacle for the GOP, as it would have ended their two-decade record of holding the line on tax increases, and it would not have secured anything of real value from the Democrats. Yes, under the terms of the suggested bargain, Democrats would have had to sign up for certain cuts in entitlement programs — but those cuts came more from the Democrats’ playbook than from the GOP’s. Among other things, Obamacare would have gone completely unscathed, and the cuts to Medicare and Medicaid would have come largely from more government micromanagement of the programs, not from market-based reforms. In short, the GOP would have abandoned its main source of electoral support — an unwavering commitment not to raise the federal tax burden — in return for affirmation of the Democratic welfare state. Some deal.

Fortunately, the speaker and the wider congressional GOP came to their senses before the Boehner-Obama talks ever reached the point of a deal. The bargain that was eventually struck to raise the debt limit in early August was far superior to what had been floated earlier in the summer, as it included no new taxes and placed enforceable caps on discretionary spending. Most observers concluded that the congressional GOP got the better of the president in the debt-ceiling fight.

Unfortunately, as the supercommittee heads toward its endgame, the same impulse that almost led to a disastrous Boehner-Obama deal in July now could lead some GOP members, on and off the supercommittee, to sign on to an equally ill-advised “bargain” with the Democrats. Recent news stories have suggested that the GOP members have offered to raise taxes by $300 billion over the coming decade as part of a deal that would also include some reductions in entitlement spending. But once again, the entitlement changes will do nothing to change the basic, cost-inflating structures of Medicare, Medicaid, or Obamacare. Indeed, if the GOP were to strike such a deal, it would make it that much harder to do what really needs to be done, which is to replace the entire health-entitlement status quo with reformed programs that rely on cost-conscious consumers in a functioning marketplace.

Moreover, the deal that is apparently under consideration would also rely on Senate Finance Committee chairman Max Baucus to write the actual tax and entitlement legislation, along with his GOP counterpart in the House, Dave Camp. This is hardly a process that builds confidence, as Baucus was a primary architect of the massive government overreach that is Obamacare. Indeed, if the supercommittee’s contribution to deficit cutting is to cede power back to the regular committee process, one has to wonder, what was the point of having the committee at all?

The problems for the GOP began as soon as the supercommittee was announced as a component of the August debt-limit deal. It was quite predictable based on the structure of the committee that the president and his allies in Congress would never let a proposal emerge if it didn’t include a tax increase that would violate the GOP’s core commitment to voters. That being the case, GOP leaders should have signaled in unmistakable terms that they would far prefer no deal to a tax increase. Instead, what we have gotten is a steady stream of statements from both House speaker Boehner and Senate minority leader Mitch McConnell that the supercommittee’s failure is not an option, thus raising the stakes and driving the GOP right into the dead end they now find themselves facing.

Some in the GOP may argue that a deal is necessary to avoid a rating-agency downgrade and the “sequester” process — which will automatically occur if no deal is reached, slashing funding across the board, including defense spending. But that’s not true. The supercommittee will make no difference to the ratings agencies, because it will make no difference to the final amount of deficit reduction — if it succeeds, it will merely replace the sequester process with the agreed-upon spending cuts and tax hikes. There is virtually no chance that the supercommittee will go beyond the required deficit reduction. And even if the supercommittee fails, a sequester is not guaranteed. There will still be a year before any cuts are implemented, leaving plenty of time for the normal legislative process to work toward an alternative series of cuts to substitute for blunt defense-spending reductions. In other words, the demise of the supercommittee would be far from the end of the story.

The supercommittee process was never a good idea, as it left the GOP vulnerable to Democratic hostage taking. Nothing would please the president more than to see his adversaries capitulate on their no-tax-hike pledges. The problem is compounded by some GOP members on and off the supercommittee who seem eager for a deal because it might enhance their own personal stature as power brokers.

It’s been clear for two years now that the kind of fundamental fiscal reform necessary to put the nation on a strong foundation for growth will not be possible with the current president. Cutting a bad budget deal now will only make it more difficult to do what is necessary if and when the opportunity for real reform presents itself in 2013.

— James C. Capretta is a fellow at the Ethics and Public Policy Center. He was an associate director at the Office of Management and Budget from 2001 to 2004.

TOPICS: Business/Economy; Constitution/Conservatism; Government; News/Current Events
KEYWORDS: debt; supercommittee; taxes

1 posted on 11/18/2011 7:59:56 AM PST by SeekAndFind
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To: SeekAndFind

The “supercommittee” was dead in the water the moment it was announced, as the ideological balance was doomed to stalemate.

Not one of the Democrats, moon pie liberals all, will seriously consider ANY entitlement reduction or reform. Not one of the Republicans would consider any inkling of any new tax, or more than some tinkering around the edges of existing tax deductions or credits now in the tax code.

Failure was not the worst option. It was the ONLY option.

2 posted on 11/18/2011 8:12:15 AM PST by alloysteel (Are Democrats truly "better angels"? They are lousy stewards for America.)
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To: SeekAndFind

Senator Max Baucus, Democrat, Montana, was raised on the family’s Seiben Sheep Ranch near Helena, MT.
One day, Max’s Dad got into his pickup and went out looking for young Max. He drove behind the barn and found Max furiously humping a ewe.
“Max!”, his Dad screamed, “Get in the truck!”
They roared into town and stopped in front of the post office. A line of people extended outside the doors of the post office and down the block.
“There!” pointed Max’s Dad, “Have sex with one of those people!”
“Why one of them?” asked Max.
“Because today is April 15th”, explained his Dad. “The only people lined-up at the post office on April 15th are people who have to pay their taxes.”
“So?” asked young Max.
“So”, explained Max’s Dad, “We’re Democrats and we screw taxpayers. Leave the sheep to the libertarians.”

3 posted on 11/18/2011 8:16:27 AM PST by blueunicorn6 ("A crack shot and a good dancer")
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To: blueunicorn6
What an interesting Wyoming joke, but the Senator is from Montana.
4 posted on 11/18/2011 8:27:05 AM PST by Robert357 (D.Rather "Hoist with his own petard!"
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To: Robert357
One of the dirty little secrets of the Super Committee is what “failure” on their part will cost other government agencies.

Failure on the part of the super committee will likely cause a credit down rating of US bonds and that in turn will increase the borrowing costs of States, Counties, cities and special districts across the USA.

Let me show you a specific example of what Failure on the part of the Super Committee is likely to cost just one state during a 2-year period.

“...And then there's Sen. Patty Murry, and the supercommittee trying to come up with federal budget cuts.

“I'm not counting on anything coming out of the supercommittee. I've totally discounted any federal action until after the next election,” Raha said.

Raha warned that if Italy goes bankrupt or Congress doesn't make cuts, Washington state's money woes climb from about $2 billion to $4 billion. Legislators say they can't plan for that sort of contingency....”

5 posted on 11/18/2011 8:32:29 AM PST by Robert357 (D.Rather "Hoist with his own petard!"
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To: Robert357

What the ????? Oh, you’re being droll, you little rascal you. Droll, droll, droll.....yesiree Bob.....droll.

6 posted on 11/18/2011 8:39:26 AM PST by blueunicorn6 ("A crack shot and a good dancer")
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7 posted on 11/18/2011 9:02:00 AM PST by RedMDer (Forward With Confidence!)
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To: blueunicorn6
I am real serious.

Failure on the part of the super committee will result in a down-rating of the federal debt.

That will cause higher federal borrowing costs. That will cause higher state borrowing costs. That will cause higher city, and special district borrowing costs.

For the state of Washington that is estimated to be a $2 Billion dollar impact over two years. I have no idea what the cost to California will be or the cost to many other states that are deeper in debt and more desperately attached to borrowing.

The jackasses in DC are going to cost the tax payers billions upon billions of dollars if they don't succeed. When you add up all the higher costs that sewer districts, water districts, transportation districts, cities, counties, States and the federal government will have to pay, in-action on the part of the Super Committee is almost criminal.

8 posted on 11/18/2011 9:32:01 AM PST by Robert357 (D.Rather "Hoist with his own petard!"
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To: SeekAndFind

supercommittee = Debacle

9 posted on 11/18/2011 9:32:01 AM PST by Vaduz
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