Super Committee's Cuts Anything But Automatic
WASHINGTON -- The 12-member super committee created to slash the federal deficit is powered by the threat that if it doesn't come up with $1.2 trillion in savings, automatic, across-the-board cuts will be instituted to reach that same goal, with half of those cuts hitting the Pentagon.
Don't believe it.
The supposed across-the-board cuts aren't slated to go into effect until January 1, 2013. Put more simply: They might not ever go into effect.
The automatic cuts -- known as sequestration -- are often discussed in Washington as if they're certain, an inevitability that Congress won't be able to prevent. But on the same day those cuts would go into effect, the Bush tax rates, which President Obama extended for two years, are set to expire, leading to an "automatic" tax hike that is treated in Washington as anything but inevitable. (That the two coming policy changes are approached so differently -- cuts are expected; expiring tax breaks for the wealthy are brushed aside -- is a window into Washington's priorities.)
A host of other tax cuts and credits will expire on the same day, including the alternative minimum tax, ethanol tax credits, renewable energy credits and others important to businesses, the wealthy and the middle class.
A lame duck Congress would have two months after the 2012 election to stave off the expiration of both that tax policy and the super committee's "automatic" cuts.
The most likely scenario: The super committee locks up along partisan lines and, after the 2012 election, bipartisan negotiators deal with the tax cuts and the super committee's sequestration cuts, along with a basket of other expiring provisions, in one set of negotiations. Democrats will be pressured by the coming sequestration, while Republicans will be motivated by the expiration of the Bush tax cuts. And all of their negotiations will take place in a political and economic climate impossible to predict today.
"All of this at some point comes together," said Budget Committee Chairman Kent Conrad (D-N.D.) of the Bush tax cuts and the sequestration. "One thing about this place, the paces just keep repeating themselves."
While many have portrayed the super committee as having some sort of automatic axe, other observers haven't bought the idea. Stan Collender, a Democratic budget expert and consultant to Wall Street and Washington lobbyists, saw through it quickly, writing a report for Qorvis Communications downplaying the likelihood of the automatic cuts.
"There is a high probability that the super committee won't be able to agree on a deficit reduction deal and that the across-the-board spending cuts that are supposed to be triggered if that happens will NOT go into effect as scheduled in 2013," he wrote. "Federal budget agreements have seldom, if ever, gone the distance. Instead, they have always been changed, waived, ignored or abandoned."
Former Rep. Alan Grayson (D-Fla.), who is running again for an Orlando seat, noted in a blog post Monday that the Constitution is not on the side of those pushing for automatic cuts.
"Under Article I, Section 7 of our Constitution, each Congress has the same right as another other Congress to legislate. This includes 'raising Revenue' and 'Appropriation of Money,'" he wrote. "So our 112th Congress can 'pass a Bill' setting the federal deficit for this year and next year, but that's about it. Anything that goes beyond the first week of January, 2013, when the 113th Congress will be sworn in, is subject to change by that Congress, and every subsequent Congress."
Sen. Max Baucus (D-Mont.), chair of the Senate's tax-writing committee and a member of the super committee, told HuffPost that the panel is looking at the Bush tax cuts as well as other expiring credits.
"The committee is sure talking of those provisions and there are others too, and we are talking about all of them," he said.
Tom Harkin (D-Iowa), whose more than two decades in the Senate have made him witness to his share of negotiations, said that both the Bush taxs cuts and the sequestration cuts will be negotiated as one large piece during the lame duck session. "At that time, at that time," Harkin said. "Not now. At that time."
Sen. Lamar Alexander (R-Tenn.), who recently resigned from leadership so he can spend more time on bipartisan legislating and less on partisan messaging, agreed with HuffPost that the automatic cuts were not necessarily automatic.
"That’s a good point," he said. "Congress can always pass a law if it chooses to do that, but the president can veto it, and 40 senators can stop it. So I think while it's technically possible for that to happen, I think there's the fact that 38 senators of both parties signed a letter encouraging the committee to think even bigger. It's a very good sign that something is likely to happen here."
Sen. Jon Kyl (R-Ariz.), the Senate minority whip and a super committee member, also saw roping the tax cuts and sequestration together as an option.
"I don't think sequestration will take place, for one thing," he said, saying there are "lots of different options, possibilities. Who knows?"
Sen. Ben Cardin (D-Md.) said that the committee should think of the possibility of automatic cuts as motivation, but agreed that they're heavily dependent on Congress.
"The automatic spending cuts take effect not based upon the joint committee; it’s based upon congressional action," he said.
Dealing with the spending cuts and expiring tax cuts together will give Democrats a negotiating advantage, highlighting how tax policy has contributed to budget hole, Democrats said.
"Since those tax cuts and Bush deregulation and the two wars and the bailout to drug and insurance companies in '03/'04 created almost all the deficit, clearly that should be part of the solution," said Sen. Sherrod Brown (D-Ohio).
"Speaking for the Democrats, we want to see a comprehensive approach," said Cardin. "We think the revenue issues need to be on the table. We have been pretty clear about what we think about the Bush-era tax rates for the higher income."
There may also be political will to prevent the automatic cuts from going into effect, if only to save the Pentagon's budget.
"I am very concerned about broad cuts across the board, particularly as it relates the Department of Defense," Sen. Ben Nelson (D-Neb.) told HuffPost.
And the cuts already agreed to earlier this year, as part of the bargain that created the super committee, may end up being just as fantastical.
"[T]he approximately $900 billion in spending reductions put in place by the Budget Control Act are far more likely to be projected rather than realized," Collender wrote in his report. "Although the agreement put spending caps in place every year through fiscal 2021, only the $30 billion or so projected for fiscal 2012 -- which will start in about a month on October 1 -- should be considered likely to occur. The presumed spending reductions for fiscal 2013 and beyond will occur after the 2012 presidential and congressional elections and during the time frame when virtually all other federal budget agreements have fallen apart or changed. In all probability, that will happen in this case as well."