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Super Committee Struggles: What $1.2 Trillion in Cuts Looks Like

Wednesday, November 16, 2011

(Alana Casanova-Burgess/WNYC)

Should the deficit reduction super committee fail to cut at least $1.2 trillion in spending, a trigger will do it for them, taking an axe to defense spending while largely sparing entitlement programs.

The Budget Control Act of 2011, signed into law by President Obama in August, created the bipartisan super committee and charged it with reducing the deficit by at least $1.2 trillion and gave it a deadline of November 23rd. But it also stipulated consequences in the event that the committee could not reach an agreement: across-the-board spending cuts that were proportionate with the size of each government agency and program. The deficit would be reduced by any means necessary, and regardless of operator malfunction.

The trigger would enact about $110 billion from the federal budget every year for the next ten years, half of which ($54 billion) falling on spending designated "security" alone. That means that the Department of Defense would be the single biggest victim of the super committee's dithering. (The Department of Homeland Security, Veterans Affairs, and international affairs would shift to become classified as "non-security" spending in the event of a trigger, giving them greater protection from cuts.) There is, however, a protective loophole for funding wars in Iraq and Afghanistan, as well as "emergency spending."

The other $54 billion in annual spending reduction would come from non-security expenditures, but the trigger would shield Social Security and Medicaid from cuts, and it would cap Medicare's spending reduction at two for a fiscal year.


(Graphic by Alana Casanova-Burgess and Stephen Reader ) Sources: AFP, DoD FY12 Budget Request, Kaiser Foundation

(These projections assume that the super committee doesn't offer any plan for deficit reduction. Should the committee come up with a portion of the prescribed reduction—say, only $600 billion—the difference between that figure and $1.2 trillion would be made up by the trigger.)

Given that defense has the most to lose from triggered cuts, and proponents of the social safety net can rest relatively easy, Republicans should be more wary of super committee failure than Democrats. Taking Social Security and Medicaid out of the picture and cushioning the blow to Medicare is a boon for the Left and an ironic pitfall for the Right; the GOP's refusal to raise taxes may translate into unintended austerity for their favored programs and a lost shot at reining in entitlement spending. Indeed, the Office of Management and Budget estimates that over the next ten years, the cap on non-security spending would rise by about $200 billion while the cap on security spending would fall by about $100 billion. (Cutting spending by $1.2 trillion means cutting from baseline projections of what spending would be otherwise, not a pure reduction necessarily, hence the net rise in the discretionary spending cap envisioned by OMB.)

There's an interesting dichotomy at play here: the trigger is subject to rules and constraints that the super committee isn't. That is, while the trigger can't touch Social Security or Medicaid and mandates that half of all cuts come from defense, the super committee faces no such restrictions. The super committee could leave defense alone if it likes and rejigger entitlement programs as it saw fit, however unlikely that scenario is. OMB Watch, a nonprofit organization that published its own "Debt Ceiling FAQ", notes that "more programs could be on the chopping block through super committee deficit reduction than through triggered, across-the-board cuts."

Triggered cuts would begin in 2013, and when that happens "across-the-board cuts" would be at a 7.9 percent rate. Whatever budget Congress appropriates for defense that year would be reduced by 7.9 percent—same for the EPA and every other agency subject to the cuts. That's why defense gets hit hardest: excepting entitlements, it has the biggest budget to begin with.

That said, the structure of the triggered cuts is not set in stone. As Manu Raju pointed out on this morning's Brian Lehrer Show, since cuts don't begin until 2013, politicians have a whole year to change the rules; the summer's debt ceiling deadline was supposed to be doomsday, but Congress came up with a way to postpone a meaningful decision and shift responsibility. It's entirely possible we'll see a similar story unfold in 2012, with Republicans and Democrats jockeying over how the trigger will work in the absence of a deal. The rate of cuts could change, as could the division of burden, the timetable, and whatever else one might imagine.

It's extremely difficult to envision the breakdown of non-security spending cuts resulting from the trigger beyond an across-the-board rate of 7.9 percent, but the picture for defense spending is clear. Failure by the super committee would weigh heaviest on a major pillar of the Republican platform, at least under the current structure of the trigger. However, the next year offers plenty of opportunity for a Republican-controlled Congress to shift the balance of triggered cuts in a direction that favors GOP policy, potentially slimming the chances of compromise with Democrats even further in the process. One wonders if Congress will ever come to an agreement and tackle deficit reduction with a sense of finality—and face the consequences of inaction—or look upon each deadline as a chance to lather, rinse, and repeat.

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Comments [9]

Dan Woodard from Merritt Island, FL

Mitt Romney closed plants of at least two American companies, Amisco Technologies and Sensala Technologies, owned by Bain Capital under Romney, closed their plants in the US and moved all thier manufacturing to China to increase his profits. It is pure hipocrisy for him to now claim he wants to stop exporting jobs to China.

Oct. 16 2012 10:29 PM
Jerry Frey from OH

When was the last time you heard a politician announce: “I don’t care if I get re-elected!” “Let’s do what’s right for the country…”

Career politicians are more concerned with keeping their job rather than doing their job.

Read for yourself:

http://napoleonlive.info/politics/chronology-of-failure/

Nov. 23 2011 12:48 AM
david ores from nyc

Republican strategy is to destroy the American Economy, kill as many jobs as possible, cause as much financial ruin and suffering as possible, in order to harm Obama's re-election chances. That is sooooo f**ked up... Throwing the American people under a bus as a ploy to defeat Obama in 2012. Very sick minded.

Nov. 22 2011 12:43 PM
Mark

There are no actual cuts. There is just a decrease in the RATE of spending increases. Military spending will go UP 16% under the cuts.

Nov. 21 2011 12:10 PM
John Steinsvold from Long Island, NY

An Alternative to Capitalism (if the people knew about it, they would demand it)

Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.

I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

Perhaps in time the so-called dark ages will be thought of as including our own.
--Georg C. Lichtenberg

Nov. 18 2011 08:47 PM
ChrisB from San Diego

If they want to fix the budget, it's almost imperative that the Bush tax cuts expire. Every other action is too little by itself. We need to make cuts in Medicare, social security, and defense.

Nov. 18 2011 04:05 PM
Terry Spain from Steilacoom ,WA

Someone needs to look at the monies wasted ie: JBLM (Joint Base Lewis, McCord WA
One would get sick over the monies being wasted, 1.3 mil to refurbish a GYM, just spent that amount on another, all kinds on new building going up....I mean where is all the money coming from?? same thing while I was back at Ft.Knox KY....sicking to see the money being spent on new construction of buildings while they have many many that's empty from the recent move of the Armor center to GA. come on
folks,wake up, the Defense Dept is blowing money like it grows on trees....nobody gives a hoot.....you want some facts figures...then contact me,I'll open your eyes.
l

Nov. 17 2011 04:49 PM

Do you think there is a reason that the supercommittee hasn't presented a new idea for how to address even one new way to solve any of these old problems? Is it because there aren't any new, creative, insightgul, smart, innovative, breaktrhough, or novel solutions to even one of the many federal programs or departments? Sure that must be it. There is nothing new left in the universe, so our politicians are left only with trying to keep redoing what has failed in the past. In other words, to act insanely.

Perhaps the supercommittee should reach out to someone who has a better idea. Want to fix Medicare? It's not that hard. Want to help the economy rather than do the killing they usually do? It's not that hard either. Well not for someone who can think outside the itty, bitty, teeny mind-set forced upon their respective party-centric little minds.

They each have solutions the other cannot accept. Neither has a solution that will work, so it won't matter who wins; or in their case defaulting to yet another solution that doesn't solve.

They need a new idea, which means they need someone who doesn't thnk like they do.

now4yourconsideration at your service

Nov. 16 2011 09:17 PM

Dear Mr. Reader*;

If you honestly believe there's a possibility of the 'trigger' budget coming to pass, I'd like to meet with you at your convenience to discuss an interesting proposition regarding a bridge between Manhattan and Brooklyn.

* Related to that well-known person, Gentle Reader? [Sorry! Couldn't help myself.]

Nov. 16 2011 12:43 PM

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