How The Supercommittee Will Succeed By Failing

[Recursion]

From Chait (I know, I know)

The battles lines are forming over the supercommittee, tasked with finding $1.8 trillion in deficit reduction or triggering huge cuts to defense and health care. The divide isn't exactly that Republicans won't agree to higher revenue and Democrats won't agree to cut entitlements. It's that Democrats will agree to cut entitlements only in exchange for higher revenue, and Republicans won't agree to higher revenue no matter what. Liberals are disappointed in the refusal of Democratic leaders to draw clear lines in the sand, but I don't see any scenario in which Democrats cross the line Obama refused to cross when negotiating with Republicans: either entitlements for taxes, or nothing for nothing.

So, if Republicans refuse to take the deal, what happens next? Well, the Obama administration hopes that the trigger forces them to act. Republicans can't abide the severe defense cuts that the trigger would provoke. It's possibly this threat will force Republicans to bargain. But the more likely scenario is that they let the trigger go off, and then quickly undo it. National Review's editorial, I think points the way for the GOP strategy:

(snip NR quote)

...

Republicans needed a way to approve the debt ceiling without backing down from their avowed goal of reducing the deficit by a dollar for every dollar they hiked the debt ceiling. The supercommittee was supposed to lock in the lion's share of that deficit reduction. Now, suppose the parties can't agree on a fiscal adjustment -- that is, Democrats insist on a balanced deal and Republicans insist on a cuts-only deal. Then we trigger some painful cuts neither party wants, and Congress then goes ahead and cancels them out. End result: we increased the debt ceiling by $2.4 trillion, and only cut half as much from the budget. By the time this is clear, conservatives have long since turned their attention to other matters, and Boehner gets to keep his Speakership.

As I've argued several times, cuts to discretionary spending in the future mean absolutely nothing. They're just this Congress saying they really hope a future Congress only spends a certain amount. They've been routinely made and ignored for decades now. It's cuts in mandatory spending that actually stick, and there are basically none of those in the trigger enforcement mechanism (beyond some Medicare cuts that were already part of health care reform).

This whole thing is a dog and pony show.

[MilesColtrane]

1. I'm pretty sure that nothing productive will come from the committee.

Even if they do come up with a plan, I'm pretty sure that it won't survive a Congress-wide vote.

And, I'm pretty sure that the President made the same assumptions when he negotiated the deal with Boehner and insisted on the triggers that cut defense spending and leave SS alone.

A gamble, but it may turn out to be a damn good one.