From jobs plan to tax cuts, can deficit ‘super committee’ handle mission creep?
The bipartisan deficit 'super committee' is charged with finding $1.5 trillion in savings over 10 years. Can it find $450 billion more to fund Obama's jobs plan? Can it find $4 trillion? More?
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But Congressional Budget Office director Douglas Elmendorf, the only witness at Tuesday’s opening hearing, told the panel that there is “no inherent contradiction” between spending to boost jobs today and fiscal restraint in the future. One approach, he said, would be tax cuts or spending hikes in the near term to spur employment, spending cuts or tax hikes in the longer term to cut deficits.Skip to next paragraph
In Pictures Who's who on the US deficit super committee
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“If policymakers wanted to achieve both a short-term economic boost and longer-term fiscal sustainability, the combination of policies that would be most effective, according to our analysis, would be changes in taxes and spending that would widen the deficit today but narrow it later in the decade,” he told the panel.
“Such an approach would work best if the future policy changes were sufficiently specific, enacted into law and widely supported so that observers believe that the future restraint would truly take effect,” he added.
Ehrendorf also warned the panel that if Congress does not allow certain popular programs to expire, the national debt is projected to reach about 190 percent of gross domestic product by 2035. These programs include the Bush tax cuts, the annual fix for the Alternative Minimum Tax, and the fix for Medicare’s mandated cuts to payment rates for physicians.
“In sum, the federal budget is quickly heading into territory that is unfamiliar to the United States and to most other developed countries as well,” he added.
In what is potentially an even more dramatic case of mission creep, he told the panel that if it wants to reach the level of debt reduction it was mandated to achieve, and if Congress extends those popular policies, then the panel would actually need to find more than $6.2 trillion in savings over the next 10 years.
Getting to debt reduction at any level will be difficult. Any plan requires at least seven votes on the 12-member panel, which is comprised of six Democrats and six Republicans, all with strong ties to their respective party leadership. In a highly polarized climate, getting even one swing vote could be a tall leap, especially in the run-up to a presidential election year.
“It’s a super committee, not a superhero,” says Stan Collender, a longtime federal budget analyst and now a partner at Qorvis Communications in Washington. “To ask them to pay for a jobs bill or get to $3 trillion or $4 trillion [in deficit reduction] is like asking Superman to save the world while he’s surrounded by Kryptonite.”
“They couldn’t agree on 50 cents right now. The only chance they have to succeed is to stick to the $1.2 trillion to $1.5 trillion original mandate,” he adds.