StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Super Committee or Stupor Committee?

14 Sep 2011
Posted by Stan Collender

Following my takedown yesterday, here's Dana Milbank's less-than-enthusiastic take on the super committee from today's The Washington Post,

‘Supercommittee’? More than stupor committee.

By Dana Milbank, Published: September 13

So what’s so super about the “supercommittee”?

The Joint Select Committee on Deficit Reduction, as the supercommittee is known formally, held a first meeting last week that consisted entirely of speech-making by the panel members. The panel followed that triumph by holding a hearing Tuesday morning devoted in large part to trading blame for the deficit.

“We have a spending-driven debt crisis,” announced Rep. Jeb Hensarling (Tex.), the Republican co-chairman. “I hope that we’ll be able to dwell somewhat today on just how significantly the big entitlement programs are the long-term drivers of this problem.”

Rep. Xavier Becerra (D-Calif.) countered that “the biggest portion” of the shortfall, other than the effects of the economic collapse, “are the tax cuts in 2001 and 2002, the Bush tax cuts.” The wealthy, he argued, “should be willing and ready to ante up, to meet their patriotic duty to contribute revenues.”

There are skeptics who say prospects are bleak that the supercommittee will come up with anything resembling a comprehensive solution to the deficit problem. I think those skeptics are too optimistic.

As the committee learned Tuesday in testimony from Congressional Budget Office Director Doug Elmendorf, they must have legislation in hand by the beginning of November to meet their own late-November deadline. Yet if Tuesday’s hearing was any indication, they can’t agree on the nature of the problem.

“The fundamental question,” Elmendorf lectured the blame-crazed lawmakers, “is not how we got here but where you want the country to go.”

The chief congressional bean counter, highly regarded by both sides as a neutral referee, laid out the choices: If you want to keep entitlement programs the way they are, you’re going to need big tax increases and sharp cuts to everything else government does. If you want to keep taxes where they are, you’re going to need severe cuts to entitlement programs as well as to everything else.

The answer should be obvious to reasonable people: all of the above. To prevent a ruinous rise in taxes or devastating cuts to Medicare and Social Security, there will need to be smaller tax increases and smaller entitlement cuts.

There are serious legislators on the panel — Democratic Sens. Patty Murray (Wash.) and Max Baucus (Mont.), and Republican Sen. Rob Portman (Ohio) and Rep. Dave Camp (Mich.) — but there are also enough hardened partisans to encourage a suspicion that the committee has been set up to fail. That probably means committee members will agree on little more than cuts to discretionary spending programs, such as the Pentagon, homeland security, veterans benefits, food safety and air-traffic control.

Sen. Jon Kyl (R-Ariz.) indicated how low the panel’s expectations are when he began asking Elmendorf about ways to cut the deficit by cracking down on wasteful payments in programs such as Medicare.

Elmendorf resisted this thinking. “There is no evidence,” he said, that “efforts in this direction could represent any substantial share of numbers that begin with ‘t’ for trillion.”

Rep. Fred Upton (R-Mich.) apparently didn’t hear that caution. “I want to underscore what our friend Mr. Kyl said about fraud and abuse,” he informed Elmendorf.

Wasteful payments are chump change compared with the big items: tax revenue that averaged 18 percent of gross domestic product over the past 40 years but is now at 15.3 percent, and spending on Social Security, Medicare and similar programs that has jumped from a 40-year average of 7.2 percent to 10.4 percent — and is climbing fast.

Democrats seemed to grasp only the first part; Republicans concerned themselves with only the second. Upton, for his part, blamed Obama’s health-care plan, which he alleged would “cost the nation nearly $2 trillion over the first 10 years.”

But Rep. Chris Van Hollen (D-Md.), determining that “the huge bulk” of the deficit problem comes from tax policy, taunted his colleagues: “It’s time for this committee to get real.”

Each side employed leading questions to enlist the neutral Elmendorf’s support.

Hensarling asked if the growth in entitlements “can be described as explosive.”

“Very rapid, congressman, yes,” replied Elmendorf, who with his glasses and trim beard was well cast for the role of economic arbiter.

Sen. John F. Kerry (D-Mass.) asked if the current level of tax revenue is “well lower than the historical average.”

“Yes, that’s right,” Elmendorf replied.

But Portman led the witness too far when he asked Elmendorf what “ought to be the primary focus of this committee.”

“It’s really not the place of me or CBO to offer recommendations about how to proceed,” the referee replied.

Too bad. If sensible people were in charge, the committee might actually do something super.

War Profiteers

plundering the body politic for 60 years has eroded the industry base with socialized war industry equal to 5% of GDP devoted to blowing things up in dust bowls 7000 miles away, while the productive sector making goods and consummables was shipped to Red China.

The unreasonable center

The answer should be obvious to reasonable people: all of the above. To prevent a ruinous rise in taxes or devastating cuts to Medicare and Social Security, there will need to be smaller tax increases and smaller entitlement cuts.

That's a nice example of lazy punditry - the two sides have different proposals, and the not to hot, not to cold, just right solution that everyone who is "reasonable" automatically grasps is exactly in the middle. But Milbank presents no evidence that it would be the best solution. And of course what is best depends on where you stand. Milbank is an upper middle class pundit whose output has him on a track for cushy jobs as a nominal liberal for the next couple of decades. Somebody working at the Post's printing plant probably has quite different opinion on what is best, as does an unemployed person in Anacostia.

He also is lazy in lumping Social Security and Medicare into one "entitlement" bucket, when in fact their problems are completely different. Social Security can most likely be made solvent for all time with adjustments to the cap. On the other hand, Medicare will never be solvent as long as the rest of the country's health care system is careening out of control.

Elmendorf playing coy

Elmendorf's playing it pretty coy there - I suspect he knows exactly what GOPers mean when they talk about "wastefraudandabuse", namely spending on anybody the GOP disapproves of. They'd like Medicare a lot better, for instance, if you only got benefits for having a properly moral character - and the correct skin tone...

The US can reduce its deficit

The US can reduce its deficit fairly easily because our income taxes are far too low. From 1945 to 1980 income taxes averaged near 12% of GDP. Reagan reduced marginal tax rates so much that they fell close to 9%. Clinton increase them back to 12%; and Bush/Obama reduced them again to 9%. However, on budget expenses have remained close to 11-12% of normalized GDP throughout. The deficit in income taxes has been financed by borrowing, mostly from the Social Security trust fund. But, not only can we no longer continue to borrow from the trust funds, we have to start paying money back as beneficiaries start relying on the trust funds. In the short term, we have to raise income taxes to 12%, simply to cover on budget expenses. In the long term, income taxes must rise above 12% in order to pay back the trust funds.

Can we put the CBO in charge?

It sounds like there is one, and only one, adult in the room - Elmendorf. Any chance we can just put him in charge? At this point I'd prefer a bean counter to any of the other options.

Thanks for laughter and the chance to hear DE in action

Personally I wouldn't have his job for a million dollars, and all the perks. He's a truly fine man, with far greater integrity and dedication to the country's elected officials, some of whom are clearly clowns.

The real question niow is when the Super Committee fails, what happens then? The Eurozone has the focus again now, but we're really going to look like idiots for a second time shortly, and then we'll have the joy of an election year [I truly hope it's Romney not Perry].

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