StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



All Signs Are That Deficit Reduction Committee Will Accomplish Nothing

12 Aug 2011
Posted by Stan Collender

Maya MacGuineas, who heads the Committee for a Responsible Federal Budget, is one of the smartest budget people I know.  So when Maya says (at least, as I've been told she has said) that the membership of the Joint Select Committee on Deficit Reduction is in a great position to sell a comprehensive deficit reduction plan that includes revenue increases as well as Medicare, Medicaid, and Social Security reductions because -- in a Nixon-goes--to-China-like situation -- it will have the political credibility to sell the plan, I listen.

But there's one very basic flaw in Maya's thinking: Being able to sell a plan to other Republicans and Democrats first requires that the committee agree on a plan and all the signs say no way/no how/ain't gonna happen.

The two most recent indications that the super committee is doomed to fail are its membership, which was completed yesterday when House Minority Leader Nancy Pelosi (D-CA) named her three appointees, and an extremely important moment in last night's GOP presidential candidate debate in Iowa.

The membership question is easy to see: All of those selected to serve on the committee are coming to the deliberations with  uncompromisable positions on the issues that need to be compromised if the deliberations are to be successful.  Three of the appointees -- Senator Max Baucus (D-MT) and Reps. Dave Camp (R-MI) and Jeb Hensarling (R-TX) ) were members of the Bowles-Simpson commission and indicated that there were against the comprehensive plan the two co-chairmen recommended (there was no formal vote).  All six of the GOP appointees have taken the no-tax increase pledge.  Although they haven't signed a piece of paper pledging not to cut Medicare, Medicaid, or Social Security, none of the Democratic appointees have shown any willingness to do compromise unilaterally on that...that is, they have only been willing to consider those changes  if...and only if...Republicans agree to increase taxes.

None of this is the stuff that budget compromises are made of.

The important moment in last night's GOP debate in Iowa came when every candidate on the stage raised her or his hand to say they'd reject a 10-1 spending-cuts-to-tax-increase deficit reduction deal.  In other words, even the most extreme tax increase to spending cut formula that has been mentioned in recent times -- or maybe ever -- was dismissed out of hand. 

Even if they were inclined to agree to something like that, the GOP members of the committee can now be certain that they will be heavily criticized by senior members of their own party.  A comprehensive deal like that would become an instant campaign fodder that House and Senate Republicans would vote against.  You won't want to put yourself in that position if you're a GOP member of the committee.

How polarized are the Joint Select Committee's members as the debate begins?  This graph from Enik Rising gives you one indication.

This graph from Sarah Binder over at The Monkey Cage provides a similar picture:

Maya is right, of course: A compromise from these folks definitely would change the politics of reducing the deficit and make a plan much more acceptable.  It's just very hard to see how they get there from here.

 

 

Farcical

Does anyone remember the lashing the GOP gave Obama over the $500 Billion in Medicare cost reductions over 10 years that were part of Health Care Reform? Michelle Bachmann went so far as to say Obama was stealing the money from Medicare to give to the young. The Republicans are not serious about cutting Medicare. They propose stuff like the Ryan Plan ONLY because they know it WON'T pass.


No, they are very serious

No, they are very serious about cutting Medicare. The reason is because they are very serious about stealing workers retirement funds. The CBO projected that the surpluses Clinton left for Bush were enough to pay off the entire US debt by the time that the Social Security/Medicare trust funds would have to be amortized for beneficiary payments, all without having to raise taxes to pay for the amortization of those trust funds. These “surpluses” were made up entirely of excess payroll taxes building up the trust funds. Bush took those excess payroll tax receipts and gave them “back” as income tax reductions, heavily weighted to the wealthy–who didn’t create those surpluses in the first place. By doing this, Bush guaranteed that taxes would have to be raised in order to amortize the trust funds. The failure to do so simply permits the Republicons to steal the money contributed by workers for their retirement. Everything about not raising taxes or limiting expenses, is about stealing our money.


Of course, under current

Of course, under current economic conditions it's pure economic illiteracy to be worrying about the deficit at all. It's FAR down our list of things we should be worrying about. And in any case, as France is now discovering, without growth it's almost impossible to do much about it in the near term, so the deficit hawks have grabbed exactly the wrong end of the stick. Also, cutting Medicare, Medicaid, and SS (the last of which doesn't even have any relation to the deficit "problem"), all of which already have stingy benefits by developed-world standards, in order to reduce a deficit caused in considerable part by the Bush tax cuts, would be just plain immoral.

Our elites have gone insane (and have proven that they don't give a rat's about people not as comfortably well off as themselves), and I'm afraid you're part of the problem despite your generally sensible tone.


Get Grover off the committee

All the Republicans on the committee have signed Norquists no-tax pledge. They are not able to negotiate in good faith. They should revoke their pledges and free themselves from this restraining burden so that we can be assured they can do their jobs.


Not quite

First you write:

All of those selected to serve on the committee are coming to the deliberations with uncompromisable positions on the issues that need to be compromised if the deliberations are to be successful.

then you write:

none of the Democratic appointees have shown any willingness to do compromise unilaterally on that...that is, they have only been willing to consider those changes if...and only if...Republicans agree to increase taxes.

Surely you're not suggesting that the Democrats compromise on the notion that compromise should involved sacrifices on both sides? Because that kind of thinking belongs in the Onion. http://www.theonion.com/articles/obama-debt-ceiling-deal-required-tough-...


I see your true colors shining through

Yeah, this was the same part of the post that stood out to me.

The substance of that paragraph is, "the GOP is a universally extreme and irrational party. The Democrats are open to compromise."

But the tone of your post is, "Washington is dysfunctional, politicians are polarized!"

The fundamental problem with American governance is that the Republican Party is rigid and irrational. All commentary on American politics recedes in insight and value as it retreats from clearly proclaiming this ultimate truth.

"Live the life you have imagined! Go confidently in the direction of your [substantive assertions]" --Henry David Thoreau


l'esprit de l'escalier

Apologies, that last Thoreau quote should read as follows:

"Live the life you have imagined! Go confidently in the direction of your [data]!"


self-appointed...

Are the bozos running for the GOP nomination really "senior member" of the party?


Crazy People Win

Crazy people win. That's what the last year has told me. So, whatever we want to say about the committee, polarization, etc., as long as the Republicans have stacked the committee with crazy people, they win. If the American people are happy with it, so be it.


Committee Mission

Well, since the super-committee's mission is to cut, cut, cut, I am personally delighted to see that Republicans won't go for even 10% revenue increases, because like the "Grand Bargain", any agreement is BOUND to be incredibly destructive, even worse than the horrible "trigger" stuff. But either will help crater our economy further, as without growth we can't solve our economic problems PERIOD.

James Kwak has a great column on "The Weirdness of 10-Year Deficit Reduction" http://baselinescenario.com/2011/07/21/the-weirdness-of-10-year-deficit-...

With decent growth, we will get out of this trough -- but without it, we won't! Yet no one is paying any attention to growth, instead we have a "super-committee" whose whole ostensible mission is incredibly wrong-headed -- so I hope they DON'T succeed!


Stan has single-axis thinking

The graphs Stan borrowed from two other websites, as well as his article's logic, show that he's thinking along a single axis -- left to right.

He forgets that there's a third point in this policy space: AUTOMATIC CUTS, if the Super Committee doesn't get its act together. If you draw THAT political possibility into your mind map, then you might be more optimistic that we can find $2.1 T in less-than-sacred cows to cut.


We don't have a deficit problem we have a revenue problem

Rinse lather repeat!

Why do we have to continually listen to intelligent people saying we must get our deficit under control when that is NOT repeat NOT the solution to our problem. People don't have jobs or a future in this economy. Private business WILL NOT create jobs without demand and demand WILL NOT return when people don't have jobs. A catch 22. The only entity that can create jobs in a situation like this is the federal government. Considering we have neglected our infrastructure , our education system and have not invested enough in research for decades this is what we should do- immediately. That will rapidly create demand and the private sector can step up to rebalance things. This is the solution which has been shown to work again and again. Read my lips the wealthy were and are not hurt by this recession - putting more money in their pockets s simply not enough and never, ever was.


The disgusting mess continues...

I appreciate Maya MacGuineas' intelligence and dedication as well, but her level of enthusiam that the Commission will actually agree to anything is probably mis-placed, in particular given Stan's point re 10:1 no new taxes (I mean come on). Also, re the automatic cuts, anybody who's been around here for a few years knows about the multi-year last minute turnarounds on automatic Medicare physician fee schedule cuts. What is of (highly unpleasant) interest is what happens economically/fiscally if Washington continues with hyperpartisan intransigence, as we've had a small dose of that exceedingly nasty medicine recently. El-Arian predicts further fuel to the crisis in this case. Bernanke's tried his absolute best, but only rotten eggs in DC [or not, in the current month].


Accomplishing nothing would

Accomplishing nothing would be the wildly delusional best-case scenario. Considering 8 of them voted for TARP, 2 voted against (1 of them voted to bailout GM). And of the 2 freshmen, 1 advocated for TARP at the time.

Nah. This committee was put together in order to do active harm to the American people. But hey - the lobbyists and insiders will do well.


Maya MacGuineas is a sorry example of a smart budget person

Maya MacGuineas said about Paul Ryan's budget plan: "This is a bold budget, and Congressman Ryan should be congratulated for putting forward structural budget reforms to address our unsustainable debt path," when the debt reductions in Ryan's plan came entirely from magic asterisks.

I'd have hoped that smart budget people wouldn't let themselves be taken in by obvious frauds.


The Democrats won't

The Democrats won't "Compromise unilaterally". That's a great example of NewSpeak.

I know you're a smart guy, so I hope you were trying to be ironic. But, honestly, don't you think this is going to be lost on most people?


Who ever could have imagined!

I would be VERY surprised if Baucus failed to give a 7-5 vote to the GOP




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