I continue to be astounded at how many people…including a number of supposed insiders who should know much better…continue to believe that the debt ceiling increase/deficit reduction deal agreed to just before Congress left town for the summer recess is going to have as big of a positive impact on the budget outlook as we were promised when the legislation – the “Budget Control Act” – was signed into law.
In fact, if budget history is any guide, the overwhelming likelihood is that the deal will have no impact whatsoever and will be abandoned long before it is implemented.
This first of two posts on this subject is about the Joint Select Committee on Deficit Reduction (aka “the super committee”) that, in spite of all the evidence absolutely to the contrary, somehow is going to come up with the deficit reduction plan that up to now has been impossible to achieve.
The key thing to keep in mind about the super committee is that there’s a long and storied history of budget commissions completely failing to accomplish anything.
The first massive budget commission failure I know about happened almost 60 years ago when President Dwight Eisenhower created a blue-ribbon panel charged with coming up with a list of wasteful and duplicative spending. This seemingly easy (at least by today’s standards) task turned out to be impossible when the panel was only able to recommend that one obscure and pitifully small program be eliminated.
In 1982, the much-ballyhooed Greenspan Commission on Social Security failed to come up with anything on its own. It’s only considered a success because it was allowed to announce the deal that actually was negotiated privately by President Ronald Reagan and House Speaker Tip O’Neill (D-MA).
The Andrews Air Force Base negotiations in 1990 produced a deal that was so resoundingly derided immediately afterwards that key members –Newt Gingrich (R-GA) for example — refused to vote for it. Republicans now often talk about Andrews as the primary example of why there shouldn’t be budget summits. Then Office of Management and Budget Director Dick Darman, who was a member of the Republican negotiating team, never recovered his standing in GOP circles after that commission.
To these three add (1) the National Economic Commission, the panel co-chaired by Robert Strauss and Drew Lewis that was appointed by George H.W. Bush administration toward the end of his term that accomplished nothing; (2) the commission chaired by Senators Bob Kerrey (D-MA) and John Danforth (R-MO) that in 1994 came up with a report that virtually no one read or remembers; and (3) the Bill Clinton-appointed President’s Commission to Study Whether the United States should have a Capital Budget that wrote a report more obscure than Kerry-Danforth.
But relatively ancient budget history is less important in evaluating the prospects for the super committee than what happened with the multiple commission failures from just the past year or so.
Start with the budget commission that never was: the commission proposed jointly by Democrat Kent Conrad (ND) and Republican Judd Gregg (NH) that failed to be created in 2009 when seven Republicans who had co-sponsored the legislation voted against the bill that would have actually established the panel. The reason the seven opposed the legislation is one of the best reasons why the super committee is likely to fail: they were pressured to vote against it because to the possibility that revenue increases might be considered.
The failure of Conrad-Gregg then prompted the White House to create a presidential commission that eventually became known by the names of its two co-chairs -Democrat Erskine Bowles and former Republican Senator Alan Simpson (WY). Bowles-Simpson didn’t get the required 14 members to support the deficit reduction plan proposed by its chairs and ended in ignominy.
Bowles-Simpson was followed by the talks led by Vice President Joe Biden that didn’t reach an agreement, and the so-called Gang-of-Six talks in the Senate that failed to produce a plan that got more than six votes.
And the report created by an outside group from the Bi-Partisan Policy Center that was co-chaired by former OMB Director and Federal Reserve Board Vice Chairwoman Alice Rivlin and former Senate Budget Committee Chairman Pete Domenici (R-NM) that was widely praised for its recommendations absolutely failed to move the budget debate needle.
Given this unbroken series of failures, why does anyone think that the super committee will do any better? The 4 of the 12 members of the committee that were also members of Bowles-Simpson all opposed the plan proposed by its co-chairs. No members of the Senate Gang of Six, which at least were willing to compromise, were named to the super committee. All of the 6 GOP members of the committee have signed the pledge refusing to raise revenues and all of the Democratic members have all done the equivalent by saying that they will not agree to look at Medicare, Medicaid, and Social Security unless additional revenues are part of the plan.
Optimists have been saying that the one change from all the previous deficit reduction committees, task forces, and panels that have failed in ancient or recent budget history is that the super committee has a fiscal sword of Damocles hanging over its head because of the across-the-board spending cuts that automatically will go into place if it fails. Most politically onerous, we’re told, is the potential reductions in military, education, and transportation programs.
But that outlook ignores the fact that congressional Democrats and Republicans have agreed to throw those programs under the budget cutting bus when the Budget Control Act was adopted. They and the industries that would be most affected might prefer that it be otherwise, but spending cuts in these areas have already been declared to be politically preferable to a tax increase or cuts in Medicare, Medicaid, or Social Security.
In other words, those who keep saying how much confidence they have in the super committee and the prospects for it success are really doing nothing more than the budget equivalent of looking for the deficit reduction pony in a pile of fiscal crap.
And, yes, I’m definitely pulling my punches by using “crap.”
[Cross-posted at Capital Gains &Games]