Debt Committee Impasse May Keep Deficit Talks Going Through 2013

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The Deficit Reduction Super Committee holds meeting.

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer ShowPolitico congressional reporter Manu Raju talked about the latest political jockeying around the super committee negotiations.

Window dressing

Nine days away from the deficit reduction super committee deadline, prospects for a compromise between Democrats and Republicans look grim—as they have since the spring's budget showdown, through summer's debt ceiling negotiations, and for the foreseeable future. The more things change, the more they stay the same.

Tasked with reducing the deficit by $1.2 trillion, the super committee is at a predictable impasse: whether or not to raise revenue through higher marginal tax rates and fewer deductions. Will the two sides be able to find common ground that confronts the deficit meaningfully by Thanksgiving? Manu Raju isn't holding his breath.

If they find anything, it's going to be window dressing...I think they could come up with something, but not anywhere near the level most economists say needs to happen in order to get this country back on a fiscal sustainable path.

The $4 trillion scenario

Guess which side wants to raise tax rates, and which side wants to lower them even further.

It's the same debate over and over again—same players, same talking points, same battle lines. Republicans want to see the Bush-era tax cuts permanently extended rather than have them expire, characterizing the latter as a tax increase. Democrats want to restore the top income tax rate and the capital gains tax to pre-Bush levels.

But the Democrats suggest this as part of a $4 trillion deficit reduction plan, one that goes above and beyond the $1.2 trillion requirement. Raju said that in order to close the fiscal gap by that amount, the government couldn't possibly rely on Republican-favored austerity measures alone.

If you're talking about a $4 trillion plan, it can't all get done through cuts in entitlements; it has to come through revenue raisers, getting rid of a lot of deductions, and really overhauling the tax code significantly.

Essentially, Democrats are challenging Republicans to decide which is more important: a lower deficit, or lower tax rates. Know how all the Republican presidential candidates during debates say they won't accept a $1 increase in tax revenue for a $10 decrease in spending? Manu Raju said that their counterparts in Congress are holding the line similarly.

That level of revenue that would be raised, in the trillion-dollar range, is just something Republicans refuse to go along with.


When the super committee was created by law back in August, Congress made sure the deadline had teeth: if the committee fails to come up with something by November 23rd, it would trigger $1.2 trillion in automatic spending cuts across the board. About half those cuts would fall solely on defense, which, according to Raju, makes the trigger much scarier to Republicans than Democrats.

Republicans are the ones voicing more concern about [the trigger] because of the defense cuts. The Medicare cuts are capped at about two there's less outrage coming from the Democratic side of the aisle.

Fortunately for politicians hoping to hold on to their jobs a little longer, the deadline's teeth aren't sharp. Raju said the $1.2 trillion in automatic cuts wouldn't actually take place until 2013, giving elected officials a long road down which they can kick what is by now a severely dented can. Strap in.

They have the entire year of 2012 to haggle over the sequestration [if they fail by Thanksgiving].