The deal passed this summer in order to get Republican support for the necessary raising of our national debt ceiling was a bad deal. The creation of the 12-member bi-partisan “Super-Committee” charged with enacting that deal’s mandate of removing $1.2 trillion from our national debt over the next ten years was a bad idea. And, any agreement which might emerge from this bad idea born of a bad deal is destined to be a bad agreement. The cuts resulting from the trigger to be pulled in the absence of a Super-Committee agreement is the best of bad options for the American people.
Called a “sequestration,” this process would protect earned benefits such as Social Security, Medicare, Medicaid, thus protecting the vast majority of Americans who rely on them. Further, the Pentagon budget, which has doubled in the past ten years, would see a small reduction which would bring it back to 2007 funding level. Draconian and painful cuts in the order of a devastating $600 Billion to already slashed and strained social programs would begin to be enacted, but not until 2013. All of the sequestration-required cuts could potentially be refigured and re-legislated, and at a later time when the economy may have rebounded enough to better stand the ravage.
Both the Democratic and Republican proposals to the Super-Committee contain not only drastic cuts to crucial anti-poverty entitlement programs, they also lower taxes on the super-rich, or raise too little to matter much. These cuts would begin to go into effect immediately upon passage at a time when our economy is far too weak to do anything but spiral downward in the face of such austerity measures.
It is increasingly looking as though there will, mercifully, be no Super-Committee deal. This is not failure. This is hope for the American people, for our suffering and shrinking middle class, for our unemployed suffering the ravages of poverty, for 99% of us. The failure of the Super-Committee is a victory for the American people.
Lawmakers, and the public, need to understand this. Democrats on the Super-Committee need to understand this. Super-Committee Democrat John Kerry of Massachusetts needs to see the error and danger of his alarmist proclamation that the markets will react badly to the absence of a deal from the SuperCommittee. As John Irons of The Economic Policy Institute explains:
Does the market believe that Democrats and Republicans will come together in a Kumbaya moment to pass $3 trillion in tax increases and/or cuts to spending? I wouldn’t bet on it. Goldman Sachs noted in a recent Q&A on the supercommittee that, “a ‘grand bargain’ to resolve this imbalance appears to be a low probability this year. Instead, the politically realistic outcomes range from no agreement to a deal reaching $1.2 trillion in deficit reduction over 10 years.” They also note that just “32% of economists polled in the November Blue Chip financial survey expected a super committee agreement to become law.” Thus a failure would merely confirm market expectations, and there should be little reaction in the markets.
We will see backpedaling on both sides. We will see the Republicans trying to “lockbox” defense spending. We will hear cries that the sky is falling for all kinds of reasons. Don’t listen. Stand firm.
Undertand: No Deal is better than a Bad Deal; and a Bad Deal is all we would get from the Super-Committee.