The deadline is November 23, 2011.
The supercommittee, comprised of 6 Democrats (3 House, 3 Senate) and 6 Republicans (same), was charged with trying to agree to at least $1.2 trillion in deficit reductions over the next decade in order to 'solve the debt problem'. After months of negotiations and on the verge of the deadline, the supercommittee is still unable to reach an agreement...and the blame game is starting.
The failure to reach an agreement results in several repercussions. First, the failure will initiate a series of mandatory cuts in spending, roughly 50% from the Defense Department, and the other half coming from discretionary and entitlement programs. Second, with the failure to 'solve the debt crisis', the United States risks another downgrade of the national credit rating. Credit Rating agencies could take this step as early as this Friday. Thirdly, we have the inevitable political gymnastics and finger pointing over the impasse - as the Democrats castigate the Republicans for not endorsing 'revenue enhancements' (tax increases) and the Republican's slamming the Democrats for their refusal to cut spending. Finally, we have the real and most serious repercussion - the national fiscal crisis is not addressed.....although the truth being, even if there was an agreement, the national fiscal crisis still would not have been addressed.
Elements of the mainstream media celebrate 'austerity' deals as victories when the government entities decide rather than increase spending 5% in their budgets, they only agree to increase them by 2%. Somehow, the entire concept of additional spending and austerity seem like we've entered the world of opposites.
This week, this country surpassed the $15 trillion level in it's national debt. It took this country nearly 2 centuries, and President's from George Washington to Ronald Reagan (1988) to accumulate $1.5 trillion in debt - one tenth of the current level. Today, with this Congress, and President Obama, we are adding roughly $1.5 trillion to the national debt every year. This current administration likes to point the finger at their fiscal challenges to the previous Administration. Yes, the George W. Bush Administration did increase the national debt over their 8 years in office by about $5 trillion. This Administration increased the national debt by this amount in less than 4 years in office.
The Democrats contend that we have a revenue challenge and point to the 'low' levels of revenues that the Federal Government receives. While the current economic recession and very poor recovery are negatively impacting revenues, the solution is not the one advocated by the Democrats to increase taxes on the 'wealthy' or even all American's. Eliminating the 'Bush Tax Cuts' for the wealthy will not make any real dent in the $1.4 - $1.5 trillion annual deficit. We could seize 95% of the assets of the 'wealthy', and we would not cover even this year's annual deficit. As the Democrats advocate increased taxes, they are also advocating increased spending on entitlements and benefits, the expansion of the Federal government, and ultimately, the reduction of spending primarily directed towards the Defense Department.
We are spending $1T more in today's budget, well, wait a minute. We don't have a formal Federal budget. We haven't had a budget since FY2009...and that budget was passed about 6 months late - as the Democrats wanted to gain the benefits of the November 2008 election before Congress and the WH tackled the budget. Since then? Spending in our Government has been defined by 'Continuing Resolution' because there are some who apparently think having a budget is inconvenient, particularly if one might be held accountable to that budget. Here, both parties own considerable blame. Even after the November 2010 elections rebuked the Democrat efforts in Congress, the GOP leadership didn't fundamentally change - primarily because of their cowardice towards being flamed in the media for their positions and refusal to compromise. (Compromise, under the Democrat and Barack Obama definition, means the GOP surrenders to accept the position of the Administration.)
The Republican are contending that we have a spending challenge. The chart above supports that contention. They point to the increases in spending we've seen since 2008. They point to the trend lines for spending going forward. Remember the Supercommittee's goal? $1.2 trillion in cuts over the next decade? That's $1.2 trillion in cuts out of an estimated spend level of around $40 trillion across that 10 year time frame. We can almost achieve this goal in one year if we just go back to 2008 budget levels....let alone making cuts across 10 years. But we are not. The GOP leadership is not up front and actively advocating for these cuts in spending - highlighting the waste in government, the unneeded growth in government, and the unsustainability of entitlement programs designed 70 and 50 years ago today in a nation with a population of over 300 million. They are more part of the problem than part of the solution.
The ideological impasse should not be unexpected. In 2008, the Democrats celebrated the 53% - 47% victory of Barack Obama and the supermajorities in Congress as the start of decades of progressive rule for America. President Obama called this a time for 'fundamental change' in the US. Fundamental change was exactly what was intended - as were decades of ensuring progressive policies like the expansion of government, the expansion of the welfare state, and the expansion of the nanny state. Their efforts, their policies, and the results of those efforts and policies directly led to the rebuff of the progressive mindset in 2010. Congress is now, according to the Administration, a 'Republican Congress' despite the Democrats holding a 53-47 majority in the Senate. The belief of some is that 2010 was an aberration, an outlier, and not a national movement to change direction. Others say that 2010 is just the first step, and in 2012, more decisive steps are needed since the nation still is racing down the wrong path. Therefore, both sides seem to want to wait until the results of the 2012 election before deciding what their next steps will be.
If 2012 comes out pro-Democrat, we can expect another trebling down of the progressive ideological agenda. Unfortunately, we're also going to expect to discover what default looks like. It will be unlikely this country will celebrate it's tricentennial. If the GOP finds itself in control, then it will need to decide if it will lead and risk the arrows from the media (that will come regardless) or if it will declare victory if the can is kicked down the road another decade or two? Will the American people accept the fiscal and moral bankruptcy of our 'ruling class' if they fail to address the challenges we face?
The Supercommittee shouldn't be mourned. Or missed. Good riddance to the Supercommittee. It was a sham from the start - based on a false premise to 'solve the debt crisis'. Reducing the annual addition to the national debt from $1.5 trillion to $1.3 trillion starting 2 years hence isn't solving a problem. It's not even, for any reasonably smart person, appearing to solve a problem. Neither is the argument to raise taxes - be it on the 'wealthy' or on everyone in the name of 'fairness'. We can't increase taxes enough to mask the irresponsible spending - and new taxes have NEVER led to reduced spending.
The only answer is to starve the beast - to reverse the growth of government and government spending. NOW - before the damage is beyond our ability to repair.