‘Super Committee’ Fails, Triggering Across-the-Board Budget Cuts in 2013

The Joint Committee on Deficit Reduction announced Monday that it could not agree on a deficit reduction deal, confirming what many had assumed for months would be the outcome of the super committee’s negotiations.

The bi-partisan group, co-chaired by Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Texas, was charged with making $1.2 trillion in cuts over a 10-year span. After receiving recommendations from the House and Senate on Oct. 16, the committee had until Nov. 23 to make its recommendations to Congress. A final vote by Congress on the super committee recommendations would have taken place on or before Dec. 23, 2011.

The committee’s failure to produce a deficit-cutting plan of at least $1.2 trillion after two months of work activates broad automatic cuts, also known as a sequester, with approximately half coming from domestic programs and half coming from defense spending. Congress still has 13 months to reach a balanced deficit reduction deal to replace the sequester, which would take effect in January 2013.

“I think the announcement may have only come as a surprise to the members of the super committee itself,” said Association Senior Vice President Stacy Augustine. “The effort was definitely there, but even if the super committee had been able to make a recommendation, the chances of Congress being able to pass it by the end of the year seemed rather dim.”

Democrats and Republicans have been blaming each other for the committee’s inability to settle on any deficit reduction measures, but the two sides are united in calling for Congress to work out an agreement before painful automatic budget cuts take place in 2013. Republicans have already vowed to fight the cuts to defense spending.

The committee was likely considering a combination of spending cuts and tax reform. Policy analysts guessed that the committee might see the deficit reduced by 80 percent based on cuts and 20 percent with tax increases, with Democrats pushing to minimize spending reductions and Republicans pushing to minimize tax increases.

“It’s definitely to Congress’ benefit to not get very specific on just what will and won’t be part of the automatic haircut that’s a condition of the deficit reduction process,” Augustine said. “If you get specific about which programs will actually be cut, you’re just setting yourself up to be lobbied by the groups that will be harmed by the cuts.”

Murray and Hensarling released the following joint statement on Monday: 

“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.”

“Despite our inability to bridge the committee’s significant differences, we end this process united in our belief that the nation’s fiscal crisis must be addressed and that we cannot leave it for the next generation to solve.  We remain hopeful that Congress can build on this committee’s work and can find a way to tackle this issue in a way that works for the American people and our economy.”

“We are deeply disappointed that we have been unable to come to a bipartisan deficit reduction agreement, but as we approach the uniquely American holiday of Thanksgiving, we want to express our appreciation to every member of this committee, each of whom came into the process committed to achieving a solution that has eluded many groups before us. Most importantly, we want to thank the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task.”

“We would also like to thank our committee staff, in particular Staff Director Mark Prater and Deputy Staff Director Sarah Kuehl, as well as each committee member’s staff for the tremendous work they contributed to this effort.  We would also like to express our sincere gratitude to Dr. Douglas Elmendorf and Mr. Thomas Barthold and their teams at the Congressional Budget Office and Joint Committee on Taxation, respectively, for the technical support they provided to the committee and its members.”

Some experts speculated that the elimination of tax expenditures could be part of the budget reduction plan, which would have impacted the credit union tax exemption. The exemption was never seriously called into question in this process, however, and was not expected to be.

Still, Augustine expects the specifics of the budget cuts to play a major role in the upcoming elections.

The next two elections could really be a bloodbath,” she said, “depending on how the cuts are implemented.”

 

Questions or Concerns? Contact Matt Halvorson, Anthem Editor: mhalvorson@nwcua.org.

Posted in Advocacy News, Compliance, Economy.