Why The Super Committee Is Heading For Super Catastrophe

November 8, 2011 12:48 a.m.

As of Tuesday morning, betting on the Super Committee to succeed would be playing the odds.

A key member of the Senate Democratic leadership team has openly predicted the panel will gridlock and fail, and placed the blame squarely on Republicans.

As GOP committee members met privately, Maryland Rep. Chris Van Hollen — a Democrat on the panel — told Bloomberg, “You need to close some of these tax loopholes and you need to generate additional revenue. And so that balance is going to be important. We saw the dueling letters just last week. We had a bipartisan group in the House that said, ‘Look, everything is on the table including revenues – tax revenues.’ And within 24 hours you had 33 [Republican] Senators say, ‘no new net tax revenues.'”Republicans responded with a trial balloon, provided first to Wall Street Journal editorial writer Stephen Moore. “One positive development on taxes taking shape is a deal that could include limiting tax deductions, perhaps by capping write-offs on charities, state and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income,” he wrote. “In exchange, Democrats would agree to make the Bush income-tax cuts permanent. This would mean preventing top rates from going to 42% from 35% today, and keeping the capital gains and dividend tax rate at 15%, as opposed to plans to raise them to 23.8% or higher after 2013.”

Privately, Democratic aides dismissed the offer — which was not extended officially, only floated in the press — as an attempt by the GOP to pretend they’re playing nice. And though Republican aides spoke positively of the idea, they might find that a guy named Grover Norquist isn’t such a big fan.

All of these signs augur for gridlock, with just over two weeks until the panel is required to report a proposal to Congress and mere days before its recommendations must be sent off to the Congressional Budget Office for a final dollar-figure estimate.

With that in mind, here’s a quick reminder of how we got here, and a guide for the days, weeks, and months ahead.

The Super Committee exists because of Congressional Republicans’ decision to hold the nation’s debt ceiling hostage — a bid to force Democrats to agree to major budget cuts. In the end, they got half of what they wanted up front, but punted the second half — cuts to big-ticket items like Medicare and Social Security — to a new joint select committee on deficit reduction: Six Democrats, six Republicans, a bare majority of whom have the power to expedite a vote on a major package of spending cuts, savings, and tax increases through the Congress. No filibusters, no amendments, no typical legislative muss and fuss.

Hanging over the committee’s head is a Sword of Damocles — an enforcement mechanism that kicks in automatically if the panel gridlocks, the full Congress rejects their proposal, or President Obama vetoes it. Republicans refused to allow tax increases in this penalty. So instead it includes cuts to programs near and dear to Republican hearts — including $600 billion in across-the-board, automatic cuts to defense and security programs, and hundreds of billions more in cuts to Medicare providers, for a 10-year total of $1.2 trillion starting in January, 2013.

That’s driven a wedge between the faction of the GOP that cares most about maintaining high levels of defense spending, and the larger faction that has committed to never, ever vote for a net tax increase. Democrats on the committee have agreed in principle to billions of dollars in cuts to Medicare, Social Security and other safety net programs — but only if the GOP breaks its anti-tax orthodoxy and puts significant new tax receipts on the table.

It’s a quandary for the GOP — one that threatens to rip the conservative coalition asunder. Republican hawks have even proposed dismantling the defense portion of the trigger if the committee fails — but they would need bipartisan backing and President Obama’s support, the combination of which seems extremely unlikely.

Privately, administration officials believe it’s possible the panel will pass a smaller package — put a few hundred billion dollars toward the $1.2 trillion required by the debt limit law. But that wouldn’t circumvent the enforcement mechanism. It would only shrink the penalty proportionately to the size of the shortfall. In either case, failure would set off a year long political fight over the future of the country. Obama and Democrats would focus voters’ minds on the dire consequences of the GOP’s unwillingness to agree to tax increases on even the wealthiest Americans: no jobs bills, big Medicare cuts, big defense cuts and lingering budget deficits to boot. Republicans would continue to claim tax increases on millionaires would hurt small businesses, but most polling suggests the public isn’t buying it. Meanwhile health care providers and defense contractors would raise hell to prevent the penalty from kicking in — and perhaps even pressure their GOP allies to abandon their pledge and raise taxes.

If by some miracle everything comes together in the next several days, then the parties will be able to leave the sorry debt limit saga behind them and return to continuing debates over the economy and the role of government that will ultimately determine the outcome of the 2012 elections.

The TPM Journalism Fund: A New Way To Support TPM
We're launching the TPM Journalism Fund as an additional way for readers and members to support TPM. Every dollar contributed goes toward:
  • -Hiring More Journalists
  • -Providing free memberships to those who cannot afford them
  • -Supporting independent, non-corporate journalism
Are you experiencing financial hardship?
Apply for a free community-supported membership
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Senior Editor:
Special Projects Editor:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front-End Developer:
Senior Designer: