The deadline for the Super Committee to complete its recommendations for deficit reduction is Wednesday, November 23. Realistically, they’ve already passed that deadline, because any agreement must go to the Congressional Budget Office for scoring. I guess Monday is the real deadline for that scoring process. So they plan to work through the weekend to try and salvage something. Considering how things have gone in the previous several weeks, I don’t think the last few days will amount to much.
With just days remaining before their final deadline, members of a Congressional panel on deficit reduction made frenzied efforts on Thursday to overcome an impasse, but appeared to be talking past one another and reported no tangible progress toward an agreement [...]
Committee members and party leaders gave conflicting accounts of the talks. It was unclear if they were engaged in serious negotiations or just making a show of negotiating to shield themselves from blame if the talks sputtered to an end without agreement [...]
Democrats said they had radically reduced their demands and would go along with the Republicans’ latest proposal for $401 billion of additional revenue over 10 years, down from the Democrats original proposal for $1.3 trillion.
But committee members do not agree on how to measure new revenue. Republicans would permanently extend the tax cuts that were adopted in 2001 and 2003 under President George W. Bush and are scheduled to expire at the end of next year. Democrats would defer a decision on that issue and raise the new revenue by limiting or eliminating various tax deductions and credits.
So Republicans said “we will only increase revenue by $400 billion.” Democrats, after some hemming and hawing, said “OK, here’s a $1.5 trillion plan with $400 billion in tax increases, $800 billion in spending cuts and $300 billion in interest savings.” Republicans said “but we also want to reduce taxes by $3.6 trillion by permanently extending the Bush tax cuts.” And there’s your state of the talks.
John Boehner lied and said there’s been no actual Democratic offer on the table. Democrats said the ball was in the Republican’s court on revenue. This looks to be over, except for the blamestorm. Expect Republicans to accuse Democrats of hurting the troops and setting the country up to be killed in their beds by Terrorists, expect Democrats to… I don’t know, make a speech about Republicans not living up to their commitments. But it will be a biting speech!
Regardless of that asymmetrical warfare, I agree with Paul Krugman that failure is the best option at this time.
For one thing, history tells us that the Republican Party would renege on its side of any deal as soon as it got the chance. Remember, the U.S. fiscal outlook was pretty good in 2000, but, as soon as Republicans gained control of the White House, they squandered the surplus on tax cuts and unfunded wars. So any deal reached now would, in practice, be nothing more than a deal to slash Social Security and Medicare, with no lasting improvement in the deficit.
Also, any deal reached now would almost surely end up worsening the economic slump. Slashing spending while the economy is depressed destroys jobs, and it’s probably even counterproductive in terms of deficit reduction, since it leads to lower revenue both now and in the future. And current projections, like those of the Federal Reserve, suggest that the economy will remain depressed at least through 2014. Better to have no deal than a deal that imposes spending cuts in the next few years.
(Check that op-ed for his veiled swipe at Tom Friedman for being too stupid to pick up the phone!)
Monumental issues of taxes and the social safety net should not be handed over to a secret cabal of 12 legislators. It should be determined in a public debate and deliberative process. And if possible, an election. Looks like that’s what we’re going to get.