The Deficit Supercommittee Collapses

John Boehner

Republicans in Washington claimed Democrats refused to budge on entitlements. John Boehner, the House speaker, and Mitt Romney, a Republican presidential candidate, as if by rote, issued statements saying it was all President Obama’s fault. But, had a single Republican on the panel endorsed even a modest increase in upper-income tax rates, Republicans could have won trillions in cuts from entitlements and discretionary spending. (Certainly far beyond anything we would endorse.)

None would take that courageous step, and now it seems foolish to have expected that they would. In July, they rejected a “grand bargain” from President Obama that would have cut $1 trillion in domestic and defense spending, and $650 billion from Medicare, Medicaid and Social Security, all because it would have raised tax revenues by $1.2 trillion. They dismissed Mr. Obama’s second offer in September, which would have cut $3.6 trillion from the deficit, 60 percent from spending cuts.

And, naturally, they rejected the proposal from supercommittee Democrats to cut at least $3 trillion from the deficit, because a third of it would have come from higher taxes on the rich. When you hear Republicans claim that Democrats refused to touch their sacred cows of spending, remember that the Democratic offer would have cut $475 billion from Medicare and Medicaid over 10 years, nearly half of which would have come directly from beneficiaries. That’s more than the Bowles-Simpson deficit plan proposed, and eight times the level of Medicare cuts offered by President Obama in September.

These plans actually tipped too far in the direction of spending cuts. By comparison, the Republican offers were risible. One pretended to raise revenue by $300 billion, while actually calling for the Bush tax cuts to be permanent and even reducing the top bracket to 28 percent from 35 percent. The consequences of this failure are serious.

FORCED SPENDING CUTS The most immediate result will be an automatic cut in federal spending of $1.2 trillion, which will disproportionately affect defense programs. That cut, though, doesn’t take effect until 2013, which means that Congress will spend the next year trying to reconfigure it or come up with a real deficit plan.

Expect to hear a huge wailing from the good friends of military contractors in Congress, mostly Republicans, who will try to use every budgetary choke point to undo the defense sequester, possibly starting as soon as next month, when the current continuing resolution financing the government runs out.

Cutting one-tenth of the military budget is hardly a real threat to national security, and it is fitting that the sequester hits defense particularly hard because the first $900 billion in cuts in the law creating the supercommittee came out of nondefense domestic spending. An across-the-board cut of $55 billion a year is a terrible way to achieve cuts in the Pentagon’s budget. But the president and Democrats in Congress should hold firm to their pledge not to undo this sequester until Republicans give in on their pledge never to raise taxes on the rich.

Any lawmaker who fears devastating cuts to the armed forces should explain why they consider it more important to keep upper-bracket taxes historically low.

THE RISK TO RECOVERY The supercommittee drew the focus away from the more important task of creating jobs. But that need is coming right up with the renewal of the payroll tax cut and unemployment insurance, both of which expire at the end of the year. Without them, the economy could lose up to 2 percentage points of its potential growth in 2012. A deal by the panel probably could have included both measures, but now Republicans are talking about trying to extort a deal, possibly involving the Bush tax cuts, which expire at the end of 2012.


The formation of the deficit panel was an acknowledgment that the regular budget process had also failed, largely because of the 60-vote rule in the Senate, which Republicans have made routine. With the panel’s collapse, the process now returns to the usual open-air infighting, which is an alarming thought, but at least will make it clear which side is refusing to cut the payroll tax and extend jobless benefits.

It will also illuminate the Republican fixation on preserving the Bush tax cuts. By refusing the Democrats’ proposals on the panel, Republicans clearly figured that they might win the next election and keep the cuts. But even if they win the White House, getting to the necessary 60 votes in the Senate would still be a long shot.

Until then, Democrats should press their advantage. No matter what happens next November, by the time of the next postelection lame-duck session, Republicans may be so fearful of the military sequester and the expiring cuts that they might agree to a deal that preserves the cuts for the middle class while ending them for the rich.

Americans should know that that was a deal that could have been reached last summer.

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