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by Don Azarias
December 1, 2011
Like what I had been concerned about when Congress was contemplating the creation of a bipartisan “super committee” during the debt and deficit deal, it now looks like the said committee is on the verge of extinction before it could even begin to get its work done. Maybe it should be renamed “super camote” instead. In the Philippines, “camote”, is also used as a metaphor to demean someone on account of a poor performance. It’s also a form of mockery.
Budget experts warned of dire consequences if the congressional super committee fails to come up with a deficit reduction plan within a month. To make matters worse, there are signs that negotiations are faltering. And the way it stands right now, the Democrat and Republican members of the panel are at loggerheads in hammering out recommendations that must be approved by both parties for the purpose of reducing the federal deficit.
Erskine Bowles, a Democrat who was President Bill Clinton’s chief of staff and who, together with former Republican Senator Alan Simpson, was tasked, last year, by President Barack Obama, through an executive order, in finding at least $1.2 trillion in reductions over the next decade had this to say: “I’m worried you’re going to fail, fail the country. I think it will be a disaster if the super committee fails to get an agreement.” Pete Domenici, a former Republican Senate Budget Committee chairman who helped lead a debt reduction task force countered, “The super committee has enormous power. What I don’t know is whether it will use that power.”
Meanwhile, credit ratings agencies have warned that failure to rein in America’s deficits could lead to a further downgrade of its AAA rating. We can still recall that Standard & Poor’s cut the long-term U.S. credit rating by one notch due to its gargantuan debt and deficit. Another downgrade could cause U.S. interest rates to rise and lead to turmoil on financial markets that could further undermine the still fragile global economy.
At a public hearing of the bipartisan super committee, Democrats said they would make concessions to reach a deal as long as Republicans also budge from long-standing positions.
“It’s not enough for either side to simply say they want to reduce the deficit,” said Senator Patty Murray, the panel’s Democratic co-chair. “Now is the time when everyone needs to be putting some real skin in the game and offering serious compromises.”
Democrats have been pushing for tax increases as part of any deficit-reduction package, with no sign so far that Republicans would go along. Republicans instead are focused on a tax reform that lowers income tax rates and spending cuts on healthcare and other federal benefit programs.
Little sign of progress has been seen in negotiations between Democrats and Republicans on the debt panel. The Democrats presented a plan of about $3 trillion in deficit-reduction, coupled tax increases with spending cuts. Republicans, meanwhile offered a $2.2 trillion over 10 years that focused heavily on spending cuts and claimed revenues largely through a tax overhaul that they said would boost economic growth.
It was a tall order for the super committee to produce a deficit-cutting plan that would stave off the automatic spending cuts. The law requires that seven of the committee’s twelve members (that’s 50% plus 1), must sign onto any plan before it can be considered “approved” by the committee. But with the committee membership being evenly split with six members coming from each party, nothing will get approved unless they do so in a bipartisan manner.
As already predicted long before the November 23 deadline, the Super Committee- turned-Super Camote failed to reach an agreement. And should Congress fail to map out a plan to reduce the budget by $1.2 trillion by the end of 2012, the cuts will be automatically taken from an equal share of military and domestic programs beginning in 2013.
It should be recalled that the bipartisan super committee was established to find up to $1.5 trillion in deficit cuts, probably taken from benefit programs like farm subsidies, Medicare and the Medicaid health care program for the poor and disabled. I have a personal reservation from the very start on how effective this super committee would be in doing its job. Will it recommend what programs and expenditures have to be cut only to be ignored by the president?
We can still recall that President Obama, through an executive order that I mentioned earlier, created the bipartisan National Commission on Fiscal Responsibility and Reform (NCFRR) on February, 2010, to address our nation’s fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the federal government. Whatever happened to it? Nothing. Obama never acted on the recommendations of his bipartisan fiscal commission. This is a classic example of a leader who is “all talk, no action.” It’s my personal belief that the only way to really reduce the deficits is to implement stricter reforms of entitlement programs and the complete overhaul of taxation to close those tax loopholes that benefit most of the wealthy and those large business entities and Wall Street institutions.
But bear in mind that these cuts are scheduled to take effect over a period of time and future White House occupants and future Capitol Hill lawmakers, through political machinations, would be able to find ways to go around those spending caps and defeat their original intent. Once again, those Washington, D.C. political leaders can start spending money that we don’t have to put us back in the same hole we are in now.
The super committee is beginning to look like the NCFRR Obama created at the height of the debt and deficit debacle, to make himself look good in the eyes of the struggling Americans. Yet he didn’t act on the committee’s recommendations to cut the debt and deficit. The same fate awaits the super committee panel that both, the White House and Capitol Hill, agreed to create. After the 2012 presidential elections, it will be gone and forgotten and relegated into the dust bin of history.
Editor’s Note: Issue 385 of Heads Up contained titles/news headlines that were not a part of the original file. It was nothing more than a computer glitz. Sorry for the confusion.