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A Pox On All Who Insist The Super Committee Has No Choice But To Succeed

01 Nov 2011
Posted by Stan Collender

My column from today's Roll Call asks (and answers) the question of why does anyone think the super committee has to succeed?

Why Must the Super Committee Succeed?

Last week’s Fiscal Fitness asked what would happen if the Joint Committee on Deficit Reduction — the super committee that has yet to demonstrate in any way that the name is appropriate — failed? In case you don’t remember, the answer was — and still is — not much, and very possibly nothing at all.

This week’s Fiscal Fitness addresses the parallel question that seems to be much on the minds of true believers of the process, especially those who went out of their way to let me know their thoughts after last week’s column was published: Why does anyone think the super committee has to succeed?

Those who are wishing, hoping and praying for the super committee’s success seem to be basing their reasoning on four things.

First, super committee supporters say that voters won’t forgive Congress if the end result of the process is that the deficit isn’t reduced as promised.

Second, they insist that members of the committee will be embarrassed (their word, not mine) if they fail to agree on some type of deficit reduction plan.

Third, they say Congress as a whole will be embarrassed if the House and Senate fail to pass what the super committee approves and reports. They almost immediately add that the embarrassment will be significantly magnified because of all the other budget-related failures that have occurred during the past year. This includes the repeated threats of government shutdowns and the close-to-the-edge approval of a debt ceiling increase.

Fourth, true believers typically say with great passion that Wall Street will downgrade U.S. debt again if the super committee fails. This reason was repeated often during the past week after Merrill Lynch said a further downgrade was likely if the super committee process didn’t result in a deficit reduction plan being enacted.

I just don’t see it.

Let’s start with voters. Contrary to what the true blues say, the deficit reduction proposals the committee would have to recommend to make more than a token reduction in the deficit will be extremely unpopular. The polls continue to be as definitive on this issue as they have been for more than a decade: While a majority of Americans want spending reduced, they typically don’t support cuts in any part of the budget other than foreign aid. The polls also show that Americans don’t want taxes raised unless the increase is imposed on someone else.

That makes the argument that voters will be angry if nothing happens hard to believe. In fact, unless the polling on the federal budget has been consistently wrong, voter anger will be far greater if the super committee agrees to a deficit reduction plan that includes changes in Medicare, Medicaid, military spending and taxes than if there’s no agreement at all.

This point — that voters continue to want the deficit reduced but don’t like almost any of the things that would actually reduce the deficit — also belies the notion that the super committee and Members in general will be embarrassed if the process craters and nothing happens. In fact, when the committee’s Republicans and Democrats last week each publicly released plans that were obviously intended to play to their separate constituencies rather than bridge differences, we had the strongest signs yet that the opposite is true.

The members of the super committee and the political parties they represent clearly see embarrassment over not reducing the deficit as far less of a problem than the anger they would provoke if they agreed to a plan that their base considered a personal betrayal.

It’s even easier to disagree with the reasoning related to a downgrade of U.S. debt. No doubt some Americans were mortified this summer when Standard & Poor’s announced its downgrade and preferred that it not have happened. But it’s hard to see how most (any?) were so negatively affected directly and personally by the downgrade that they’ll do anything now to avoid another. Contrary to some speculation, the downgrade did not cause interest rates, which have the most immediate effect on individuals and businesses, to rise. In fact, rates fell.

And that assumes that most voters were/are even aware of the S&P announcement.

It’s hard to make the case, therefore, that another downgrade is feared or that a deal that prevented it would be politically more popular than a deal that increases taxes or cuts Medicare or the Pentagon.

I truly hope that I’m completely wrong about this. I’d like nothing better than to be surprised by the super committee and to see a long-term deficit reduction plan adopted by the late December deadline set in the Budget Control Act. If that happens, the headline on that week’s Fiscal Fitness will be “I Was Completely Wrong” in the largest boldface font Roll Call will let me use.

But the four reasons the super committee’s supporters cite just don’t provide much confidence that will happen. Instead, they reinforce the notion that the super committee process is less — rather than more — likely to succeed and fueled more by wishful thinking than by careful analysis.

Firstly, it seems to me that

Firstly, it seems to me that assuming the Committee must succeed because some of its Members, or either caucus as a whole, would be "embarrassed" if it didn't is off-base. These folks don't seem embarrassed by much.

Secondly, it appears to me to be in the interests of both sides (but particularly the Democrats) for the Committee to fail. Sure, a success palatable to both sides would be preferable, but the alternative to an agreement looks to be better than whatever agreement both caucuses might find acceptable. I happen to think this leaves better cards in the hands of Democrats come November 2012. Republican Members today are hamstrung in that they've caught themselves up in a perpetual primary that is dragging them far from the center.

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 12%(+/-1%) 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 %(and below). However, on budget expenses have remained 12%(+/-1%)) of normalized GDP throughout. The deficit in income taxes has been financed by borrowing, largely 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.

Prominent Senators are

Prominent Senators are promising to prevent sequestration in any case. So there's really no reason to risk anything.

The vast majority of voters

The vast majority of voters have no idea that this "Super Committee" even exists, let alone understand what its mandate is supposed to be, nor what is supposed to happen if it fails to achieve that mandate. The only people who are obsessed with the "Super Committee" are the rich coddled Villager millionaire political media jerks who get all aroused at the prospect of sticking it to the poor, elderly, and disabled.

Stupid is as Stupid Does!

It's pretty evident that Stupid is leading Stupid in Washington these days. Corruption is king and common sense is non existent! The first thing Congress needs to do is reduce their salaries by 50%, make it illegal for any member of Congress, The President, The President's staff or any Federal employee to receive any funds, gifts or perks from any lobbyist. Next, do away with the lifetime pension for all Congressmen/women. Take each and every department to task with a full audit so that the fraud and abuse is ferreted, duplication of departments abolished, and stop the funnel of foreign aid to all countries who are not friends of the US. Tax all goods brought into this country so that "made in America" becomes the priority and not made somewhere else! And how about let's make sure that any company or corporation that has chosen to move jobs and their profits to foreign countries are taxed out the rear and loopholes are closed for receiving grants or subsidies until which time they bring back the jobs and the bank accounts! Force any bank or financial institution that received a stimulus and chose to give that money out in bonuses or to hoard the taxpayer money to repay it with interest of 25%! Stop providing welfare, food stamps, medicaid and free housing to illegals. Their is already a process for becoming a citizen of the US and this process should be adhered to fervently! We have paid into Social Security, Medicaid, and Medicare all our lives and Congress has robbed the SS fund for years as a general cash cow! Those funds should be replaced immediately at the same rate of interest and penalty the American citizen is charged by the IRS along with penalties if the funds are not refunded within 30 days.These programs are NOT Entitlements and should not be treated as such! With seniors having the largest percentage of increase of those in poverty, the benefit should be adjusted to raise each and every one of them to a decent living situation instead of pushing them further into the abyss! The COLA should be adjusted to the same rate as that of Congress! These things should make some progress on the restoring America!

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