David Leonhardt put it this way in April: “A trick question: If Congress takes no action in coming years, what will happen to the budget deficit? It will shrink — and shrink a lot.” Annie Lowrey added, “[D]oing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically.”
It may seem unsatisfying, but if policymakers simply leave the status quo in place, and let nature take its course, taxes will return to Clinton-era rates, the Affordable Care Act will save us a lot of money, and the deficit will shrink considerably. There would still be long-term concerns related to entitlements, but for quite a while, Congress wouldn’t have to do anything — no committees, no legislation, no filibusters, no negotiations — except allow time to elapse.
E.J. Dionne Jr. moves the ball forward today, noting the combination of automatic tax increases (the return to Clinton-era rates) and automatic spending cuts (the “triggers” that get pulled when the super-committee fails) produces “a surefire way to cut $7.1 trillion from the deficit over the next decade.”
The prospect of $7.1 trillion in tax increases and some cuts that would begin taking effect in January 2013 … should hearten every deficit foe now prepared to mourn a failure by the supercommittee.
Because the bulk of the $7.1 trillion comes from automatic revenue increases, the power in future negotiations would shift toward those seeking a balance between cuts and taxes. Doing nothing is not an option when it comes to job creation. Congress still needs to act. But on the deficit, inaction now could lead to wiser action later. […]
A balanced deal would be nice but it’s now impossible — and not because of some vague congressional “dysfunction” the media like to talk about. Sane fiscal policies are blocked because one party refuses to accept the need to roll back the excesses of the 2001 and 2003 tax cuts. If Congress does nothing, those tax cuts go away. That’s why a “failure” by the supercommittee to endorse a deeply flawed deal is actually a victory for sensible deficit reduction.
I’d just add one key detail: GOP officials won’t like this, but it was their idea. It was Republicans who included a sunset clause on their irresponsible tax cuts, setting them on course to expire. It was also Republicans who demanded the spending cuts in the “trigger” over the summer.
In other words, GOP policymakers will scream bloody murder if the lower tax rates expire and Congress is required to cut $1.2 trillion, half of it from the Pentagon budget. But these are the precise consequences that Republicans themselves invited with their own policies.
The GOP voted for this. The party has nothing to whine about now.