After weeks of bargaining, a bipartisan “super committee” on federal finances is drawing toward its deadline with no deal in sight.
That sounds like a bad thing.
But is it? This question is moving toward the forefront of political discussion as the scenario of no bargain – grand or otherwise – looks increasingly likely.
GALLERY: Who’s who on the deficit “super committee”
The super committee of 12 lawmakers was set up this summer in debt-ceiling legislation with the following mandate: Figure out how to cut $1.2 trillion or more from federal deficits over the next decade, or else automatic cuts affecting both domestic and military spending will be imposed.
Many people outside Washington would like to see Republicans and Democrats compromise. That includes both ordinary voters and economists who see serious fiscal challenges and don’t necessarily believe either party has all the answers.
Yet an alternative outlook – held by some on both left and right – is also cropping up as the super committee’s Nov. 23 deadline (next Wednesday) approaches.
That view: Don’t get hot and bothered if the panel fails to deliver. The battles will just be fought again after the next election – and maybe on that day the side with the best ideas will have more political clout.
Here’s the latest word from New York Times columnist Paul Krugman on the left: “Don’t we eventually have to match spending and revenue?” Yes, he says, but “it’s a decision that should be made by voters, not by some committee that allegedly transcends the partisan divide.”
And here’s a conservative editorial from the Wall Street Journal Friday, arguing against a compromise that Democrats insist should include higher tax revenues: “If the super committee choice is between a tax increase that would hurt the economy or letting the sequester [automatic spending cuts] strike in 2013, go with the sequester.”
Although Mr. Krugman and the Journal’s editorial disagree about tax policy, they share the premise that kicking the can of decisionmaking down the road, past the 2012 elections, isn’t that bad.
Here’s the other view, though. It’s quite possible that neither political party will get a strong mandate for its views in the 2012 elections, and when the two major parties show an inability to find compromises, it erodes the public confidence and optimism at a time when a weak economy has already created a downbeat mood.
Moreover, the US government has already seen one credit-rating downgrade on its debt. More are possible with each year in which important decisions are kicked down the road. (The automatic cuts focus on the discretionary portion of the budget, sidestepping core issues for the long term: entitlement reform and tax-code reform.)
However the timing goes, the US has an “unsustainable trajectory” of public debt growth, says Karen Dynan, an economist at the center-left Brookings Institution in Washington. The unresolved fiscal issue “hurts confidence because people take it as a signal that our government isn’t up to taking on big challenges facing our economy.”
Plenty of other policy analysts echo that idea, warning that political compromises won’t necessarily become easier by waiting.
Those pushing for a deal say that viable strategies have already been mapped out by bipartisan efforts such as the Bowles-Simpson Commission and a Bipartisan Policy Center plan from Alice Rivlin, a former Clinton administration official, and former Sen. Pete Domenici (R) of New Mexico.
“Failure is failure,” said a communique from the moderate Democratic think tank Third Way. “The super committee is a test that Congress has given itself. It is an open book test. Third Way, Bowles-Simpson, Rivlin-Domenici and others have given them the answers. And right now they are getting an ‘F’.”
It’s still possible for the ground to shift, and for a deal to occur.
As the Monitor reported earlier this week, the deficit talks have kindled a revival of bipartisan movement within Congress, operating outside party-line politics. From the outside, there’s pressure from voters, who in polls have said they support budget compromises and deficit reduction.
The risk of a credit downgrade is another goad to action, although for now investors exhibit strong confidence in US Treasury bonds – partly as a haven from the even tougher fiscal problems in Europe.
Whether the super committee fails to cut a deal or not, here’s something to keep in mind. Behind the “it doesn’t matter so much” view is an important truth: Any budget action that happens now – whether it’s a grand bargain or automatic cuts or something in between – will be revisited by a future Congress and White House.