Back in August, negotiations over the Federal budget were so impossible that Congress had to punt to a “Super Committee” that had until November 23rd to report back on how to proceed. Failure to come up with a plan would trigger automatic spending cuts and probably quite a bit of chaos.
The bad news is that ten days out there is no sign of an agreement. The good news is that it’s taking them so long because they are tackling the big issues such as tax and entitlement reform.
The process itself is deliberately private, meeting entirely behind closed doors. The news we get comes in the form of leaks and answers to direct questions on how it’s going. Most members are pretty candid about the possibilities of the panel coming to some conclusion, and some are a bit bleak. But overall, experts in the field are hopeful.
News trickles out all the same, and if you want to follow it closely there is at least one site dedicated to the proceedings – Fiscal Times. It is worth a follow if you want to get the latest reading on the tea leaves, often about all we have to go on.
What we do know is that the Republicans have decided that tax reform is not the same as raising taxes, although the effect may be the same. This is one of the key principles of the Simpson-Bowles framework, and adopting it after nearly a year of speechifying and snarling is a major step forward. It means that some new revenue, on the order of $300 billion over 10 years, is likely to be in the mix if there is an agreement in the next 10 days.
“The kind of reform we’re talking about is actually guaranteed to create millions of jobs over time and also bring more revenue,” said Sen. Pat Toomey, R-Pennsylvania. By stressing growth there may wiggle room with the Republican base, but the proposal is on the table. Will it get anywhere? “I believe that all of the ingredients for a good resolution are there,” according to Rep. James Clyburn D-South Carolina. “We just need to develop a will.”
Medicare reform has been far trickier, with no apparent breakthroughs at all. It is almost certain to be part of the mix for the Republicans to accept tax reform of some kind, but a deal has eluded them as far as we know so far.
What we can say, however, is that the sides are very serious and are probably watching the situation unfold in Europe as they go forward. Failure to create an agreement has tremendous consequences which they are all very aware of – even as the clock is ticking down. Moody’s and other bond ratings firms have been rumored to have weighed in with threats of downgrades, although none has been made publicly.
What will happen in the next 10 days? There seems to be a lot of will developing for a grand deal that will encompass everything that we know needs to be fixed in the future. But will it pass before the deadline for all of Congress to act on December 23rd? That is not as clear, but the relative silence from the rest of the very unpopular Congress suggests that they want to see what comes out of the Super Committee before they say anything. That’s a good sign as well.
This process may yet work, but it has to work fast at this point. There could yet be hope for the broken and dysfunctional Congress to achieve something not just adequate, but possibly even great. We will see.