With the collapse of the Super Committee deliberations, a dysfunctional government struggles to address a raft of pressing short-term business while figuring out what to do about the long-term deficit. But agreement on important matters including tax and entitlement reform is out of reach and will likely remain that way for quite a while. How can we end this paralysis? We hope you’ll add your idea to the comments, below.
So where do we go from here?
The “Super Committee,” born of faint hope that bipartisanship in battling the long-term deficit was still possible, laid a big egg just days before Thanksgiving. President Obama returned from a nine-day trip to Asia and Australia sternly shaking his finger at Republicans for their intransigence over tax increases. And the eight Republican presidential candidates continued to denounce Obama as the worst steward of the nation’s economy of any president in memory – with nary a mention of George W. Bush.
Most members of Congress fled Washington for the Thanksgiving break even before the collapse of the Super Committee deliberations on Monday. By Tuesday, Obama was back on the campaign trail in New Hampshire, challenging a dysfunctional Congress to return to work after the holiday and move quickly to extend the payroll tax cut and unemployment insurance for many of the nearly 14 million jobless Americans.
For sure, the short-term pressures on Congress and the White House will be formidable. Besides resolving the controversy over the payroll tax cut and unemployment insurance, there are an additional 60 tax provisions set to expire by the end of the year unless lawmakers act – including a measure that softens the blow of the alternative minimum tax. Moreover, a temporary spending measure that finances the government’s day-to-day operations will expire on Dec. 16. That means Republican and Democratic appropriators and the White House must negotiate or yet again, risk a government shutdown.
Big Stuff, Still on the Federal Table
Agreement on the important stuff is frustratingly out of reach and is likely to stay that way for quite a while. How to bolster the sagging economy? How to reform a byzantine and unfair tax code? And how to wrest control of spending for national health care and retirement programs that is driving the national debt (now $15 trillion) steadily higher? Whether a legislative and political system so dysfunctional and so reviled by the vast majority of American voters can achieve agreements of that magnitude in the current political climate is hard to imagine.
For sure, the combination of last summer’s agreement between the White House and Congress on nearly $1 trillion of long-term deficit reduction, plus the additional $1.2 trillion of automatic cuts in defense and domestic programs that will begin to take effect in 2013, will help to slow the rate of spending. And with the two major Bush-era tax cuts scheduled to expire by the end of next year, there could be as much as an additional $4 trillion of savings to the Treasury in the coming decade – although practically no one thinks that Obama and Congress would permit the entire tax cut to expire.
The much harder and more fundamental questions about taxes, entitlements and defense are now certain to fester for many months.
Many are now pointing to after the 2012 election as the earliest that the Obama and Congress could work out their differences and finally strike a “Grand Bargain” -- but only if Obama manages to win reelection and the Democrats retain control of the Senate. If the Republicans sweep to victory next fall, then all bets are off heading into a new Congress and a new GOP administration, where Republicans would totally set the agenda.
Over the past year, the White House and Congress have failed to argue, amend and approve the work of at least three major deficit reduction commissions, including the bipartisan Bowles-Simpson fiscal commission which recommended major deficit reduction packages in the neighborhood of $4 trillion over the coming decade. A “Gang of Six” Democratic and Republican Senators spent many long and ultimately fruitless months trying to negotiate a package acceptable to both sides. Obama and Republican House Speaker John Boehner of Ohio met repeatedly in secret last summer and came up empty.
And of course, the “Super Committee,” amid great fanfare and media scrutiny, spent four months spinning its wheels in search of common ground on taxes and entitlement savings before formally giving up this week.
Maybe, in the end, Congress and the White House will have to return to “regular order” to find success, which is the basic way the two branches of government traditionally have worked under decades-old budget laws. Essentially, the president submits a proposal, the two chambers amend and then vote on the plan, and then everyone meets in a big House-Senate conference and hammers out a final measure that the president can either sign or veto.
It’s the old textbook approach, but given the terrible string of failures by special commissions and super committees and clandestine meetings at the White House, it sounds pretty good.
Readers, how do you see all of this playing out? Please add your comment below.