October 31, 2014

Washington Budget Report: Aug. 16, 2011

« Back to WBR Issue List

Sign Up to receive the Washington Budget Report »


The Washington Budget Report will only publish periodically while Congress is in recess.

Joint Committee Appointees Face Long Odds

Congressional leaders last week appointed the joint committee charged with finding most of the savings promised in the recent deal to raise the debt limit.

Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.) will chair the new panel, widely referred to as the “Super Committee.” Other senators appointed to it are Democrats Max Baucus (Mont.) and John Kerry (Mass.), and Republicans Jon Kyl (Ariz.), Rob Portman (Ohio) and Patrick  J. Toomey (Penn.). Other House members named to the committee are Republicans Dave Camp (Mich.) and Fred Upton (Mich.), and Democrats Xavier Becerra (Calif.), Jim Clyburn (S.C.) and Chris Van Hollen (Md.).

Established as part of the debt limit deal approved earlier this month, the committee is to recommend by Nov. 23 at least $1.5 trillion in deficit reduction over 10 years – a target it should ideally exceed. Its recommendations will receive up-or-down votes in Congress.

If the committee effort falls short, a back-up “trigger” mechanism threatens large cuts in defense and other spending although Social Security, Medicaid and some other entitlement spending are exempt. Medicare cuts under the trigger are capped at 2 percent and may not come from benefits. There is no provision for higher revenues in the trigger.

Appointees to the new committee, while very knowledgeable about budget issues, are widely considered unlikely to buck top congressional leaders. Nor have the appointees shown great enthusiasm for a bipartisan “grand bargain” that would produce the large, comprehensive reforms necessary to put the country on a sustainable track.

The President’s bipartisan fiscal commission and the Senate’s “Gang of Six” have recommended such reforms. Four of the Super Committee appointees served on the President’s commission, but unfortunately all four voted against its recommendations. Senate leaders also failed to appoint any of the “Gang of Six” to the new committee.

“I would not call it a ‘dream team’ for a grand bargain,”  said Robert L. Bixby, executive director of The Concord Coalition. “These are a lot of the same players who have been failing to agree on compromises or to support them this year.”

Despite long odds, there is reason to hope that the committee will feel increased pressure to reach consensus from constituents frustrated with political gridlock, a slowing economy and nervous markets. In addition, the trigger mechanism was designed to prod lawmakers to take action, as explained in a new Concord video about the committee.

Public Engagement Is Critical

Deficit reduction talks this year have largely taken place behind closed doors, without engaging the public in any meaningful way. But Robert L. Bixby, executive director of The Concord Coalition, argues that the dozen lawmakers who have been appointed to a new deficit reduction committee should include an unofficial 13th member – the American public.

“If the committee locks itself away in a congressional cloister,” he writes in a new blog posting on The American Square,  “the public will find it hard to understand and accept the politically difficult choices that the committee must make to reach its deficit reduction goal.”

Bixby suggests that committee members do “two-by-two” programs in which they present agreed-upon facts to engage each others’ constituents about possible solutions to the nation’s fiscal challenges.

Through its “Fiscal Wake-Up Tour” and “Fiscal Solutions Tour,” Concord has found that audiences around the country are receptive to events in which speakers with different views on the appropriate size of federal spending and taxes emphasize key areas in which they agree.

These areas of agreement, Bixby says, include the overall dimensions of the problems, the nature of the trade-offs in considering solutions, and the need to make changes sooner rather than later for the sake of future generations.

Market Turmoil Amid Doubts About Washington

Wall Street recorded one of the most volatile weeks in its history as investors last week reacted to the struggling American economy, Europe’s debt crisis,  the downgrade of the U.S. credit rating by Standard & Poor’s, and continuing doubts about Washington’s ability to put the nation on a better fiscal path.

Joshua Gordon, policy director for The Concord Coalition, says there is understandable concern about the failure of elected officials to reach a “grand bargain” on recommendations  for comprehensive fiscal reform.  In their debt limit deal two weeks ago, Congressional leaders and President Obama settled instead for limited spending cuts, no changes in tax policy, and little to support the economic recovery.

“Not only did we not get a grand bargain for the fiscal challenges, but we’re still faced with the inability to deal with the economy over the short term,” Gordon says in a new Concord video about the markets' reaction to the debt deal and the S&P downgrade.

Diane Lim Rogers, Concord’s chief economist, notes in the video that the initial relief that the government would not default was soon followed by the realization: “Oh yeah, we haven’t really fixed anything.” Rogers hopes the turmoil in the financial markets will prod lawmakers to pursue more substantial fiscal reform.

Fitch Ratings today reaffirmed its AAA rating for the U.S. although it warned that more progress needed to be made on deficit reduction.