This was originally published in The Hill.
The hand-wringing has begun. The 12 members of the Joint Select Committee on Deficit Reduction – also known as the Super Committee – appear to be deadlocked, and many in Washington are looking to the sky to see if it will fall. They shouldn’t worry. In terms of deficit reduction, there’s only one way that the Super Committee can actually fail, and not coming up with a deal isn’t it.
Certainly, if the six Democrats and six Republicans on the committee don’t come to a bipartisan agreement that finds at least $1.2 trillion in deficit reduction, some will call that a failure. But in terms of actual deficit reduction, it won’t matter. If they don’t reach agreement, a set of spending cuts will automatically kick in to reduce the deficit over the next ten years by the full amount.
Either way, the Super Committee process will result in at least $1.2 trillion in deficit reduction. That comes on top of nearly $1 trillion in spending cuts already enacted as part of the debt limit deal. Together, the total effect will be to reduce the federal budget deficit over the next ten years by about one percentage point of GDP. That may not sound like a lot, but it is almost the same size as the deficit reduction packages of 1990 and 1993. Those pivotal pieces of legislation combined with strong economic growth to produce the first balanced budgets in decades.
And that is how we’ll balance the budget this time, too. Not with a single enormous package that solves the entire problem in one fell swoop, but with several attempts that make substantial, but incremental, progress. It would be great if the Super Committee could agree on a larger deal that raised some taxes, cut some spending, and really slashed the deficit by a huge amount. But if they can’t, no worries, this won’t be the last chance for real deficit reduction.
In fact, there’ll be another golden chance at the end of next year. That’s when those triggered cuts are scheduled to kick in. Now, don’t kid yourself; the automatic cuts will be brutal. They’ll fall heavily on areas of the budget that have already suffered severe cuts. Programs, services and benefits like veterans’ health care, education funding, the National Institutes of Health, and even law enforcement and border control are likely to come in for steep reductions. But January 2013 also happens to be when the Bush tax cuts are scheduled to expire. So in essence, Congress will be facing not one, but two triggers: one on the spending side and one on the tax side.
Democrats and Republicans alike will be eager to avoid those outcomes. Which means that November and December of 2012—after the presidential election, but before the automatic cuts kick in and the Bush tax cuts expire—is when we are likely to produce the next big forward step on our path to a balanced budget.
That’s why the sky won’t fall if the Super Committee doesn’t reach an agreement. The most promising moment for deficit reduction comes next Thanksgiving, not this one. Indeed, right now – with a sharply divided Congress and just 12 months before a presidential election – seems like particularly bad timing for coming up with bipartisan agreement. So as long as the Super Committee doesn’t employ a bunch of gimmicks, tricks or magic asterisks to “turn off” the triggered cuts without replacing them with real deficit reduction, then we’ll still be on track for a more sustainable fiscal future.
In fact, that’s just about the only way for the Super Committee to fail at reducing the deficit. If they remove the threat of the automatic cuts (or the expiring Bush tax cuts for that matter) without finding concrete ways to replace the lost savings, then they will have seriously undermined our best chance for significant deficit reduction, without anything to show for it.
If the Committee succumbs to the same political pressures that led previous bipartisan negotiations to break down, that’ll be too bad, but it won’t be a tragedy. Deficit reduction is going to come in fits and starts, and while this process was worth a shot, prospects for a “grand bargain” this time around were always pretty dim. The good news is that the next opportunity for deficit reduction is on the horizon, and it looks like a doozy. So long as the Super Committee doesn’t do anything to undercut that opportunity, it will not be a failure.
This was originally published in The Hill.
Michael Linden is Director of Tax and Budget Policy at the Center for American Progress.