Republicans apparently just submitted a last-ditch effort to get agreement on the Super Committee. It was a $545 billion proposal, less than half of the minimum requirement to avoid all of the automatic trigger cuts. And it included $3 billion in tax increases.
For those of you scoring at home, that’s a ratio of about 181:1.
Democrats rejected it.
It’s almost getting fun to watch the catfood commission fail so thoroughly. If we’re already submitting proposals of less than half the minimum requirement, then there’s nothing left to fear from this thing. It’s also good news that the unbalanced proposal was rejected, because that probably included a lot of cuts already offered in past proposals by Democrats.
It will be fun to watch Alan Simpson and Erskine Bowles and David Walker and Maya MacGuineas and all the rest whine and cry next week when this thing gets a real Viking funeral. What they know, but won’t tell you, is that simply doing nothing would lead to $7.1 trillion in deficit reduction. In other words, just offsetting any changes to current law will accomplish about twice as much as their alleged goal for cutting deficits. They won’t tell you this because it comes primarily from letting tax cuts expire.
$3.3 trillion from letting temporary income and estate tax cuts enacted in 2001, 2003, 2009, and 2010 expire on schedule at the end of 2012 (presuming Congress also lets relief from the Alternative Minimum Tax expire, as noted below);
$0.8 trillion from allowing other temporary tax cuts (the “extenders” that Congress has regularly extended on a “temporary” basis) expire on schedule;
$0.3 trillion from letting cuts in Medicare physician reimbursements scheduled under current law (required under the Medicare Sustainable Growth Rate formula enacted in 1997, but which have been postponed since 2003) take effect;
$0.7 trillion from letting the temporary increase in the exemption amount under the Alternative Minimum Tax expire, thereby returning the exemption to the level in effect in 2001;
$1.2 trillion from letting the sequestration of spending required if the Joint Committee does not produce $1.2 trillion in deficit reduction take effect; and
$0.9 trillion in lower interest payments on the debt as a result of the deficit reduction achieved from not extending these current policies.
The point is not to let all of this happen; the point is not even to pay for all the fixes to this, necessarily. The point is to show that the medium term budget is ALREADY in primary balance, and that just relatively following that guide path – even while allowing for targeted measures to improve the economy – is completely sufficient, rather than cutting everyone’s Social Security and Medicare benefits.