No Threat of Armageddon? No Budget Deal
Many were surprised that the super committee could not reach an agreement to solve our protracted budget mess. If they had been paying attention to how this mess was created over the past several decades, I would have to wonder why.
During boom years, Congress avoids paying off debt and instead expands entitlement programs while flush with cash. When times turn bad, Congress greatly expands the debt problem by expanding entitlements to ease the pain and by creating costly new “jobs” programs.
Congress and presidents only address the budget deficit issue under the threat of Armageddon.
Worse yet, even to get the minimal agreements that they do achieve require lots of budget gimmickry that masks the amount of true savings.
Why was the super committee discussing packages that only rearranged the deck chairs? Because there was no real fear of Armageddon if they did nothing. The size of the deficit will be the same. Government debt will still be allowed to be issued. Government bills will still be paid.
The Budget Control Act (BCA) that was enacted in August as a result of the debt limit negotiations included provisions to sequester funds over the next decade to save the same amount of money that the super committee was attempting to achieve.
President Obama sat on the sidelines because the decisions of how to achieve the small reductions in spending growth required by the sequestration will not occur until two months after the presidential elections next November. Additionally, the BCA guarantees that he will receive a $1.2 trillion increase in the debt limit in January regardless of the success or failure of the super committee. Thus, President Obama was content to sit on the sidelines and twiddle his thumbs as he watched the two parties throw mud.
Where is the crisis to drive a deal?
While there are plenty of smaller items that the negotiators could agree on, those will wait until the next big bill that “must pass” — the Omnibus Appropriation bill in December.
Republicans want some extensions of some of the Bush tax rates that are expiring. The Democrats have a host of spending programs they want to fund in the face of a debt crisis, such as extension of expanded unemployment insurance benefits, more infrastructure spending, and extension of the payroll tax cut — which was needed to get a tax cut to the almost fifty percent of people who pay no income taxes. Both sides would like to temporarily fix the Alternative Minimum Tax (AMT) through the elections.
Finally, Congress needs to address the “doc fix” before January when physicians face about a 30% cut in Medicare reimbursements for their services. The American Medical Association (AMA) was promised by the Democrats that this annual problem would be permanently fixed in the Obamacare bill in return for the AMA support for the bill.
However, the doc fix was pulled from the Obamacare package because Democrats wanted to spend that money on other new benefits. So they promised the AMA it would be fixed in separate legislation right after Obamacare passed. The doctors now understand they were the victims of a bait-and-switch. The permanent doc fix never passed.
Now Democrats have figured out how to finally pay for it: offset all of this new spending by taking credit for not spending money on the wars they have already said they were not going to continue.
The Budget Control Act allowed for budget credit in a category called Overseas Contingency Operations (OCO). This defense spending on the wars we are fighting has always been added to the budget as emergency supplemental funding. This money has been added outside of any spending caps that previously had been agreed to.
Now under the BCA, you can count money not spent outside of budget limits as budget savings.
Thus, by announcing that you will not continue wars in Afghanistan and Iraq at current levels, you get credit for budget savings that you can spend elsewhere. If in the future we determine our military forces still need to be engaged those regions, we declare it an “emergency” and can continue spending all the money we want.
When will all this budgetary sleight-of-hand happen?
Look for it near Christmastime, as government funding will be about to run out and Congress must either pass an Omnibus Appropriations bill for the rest of fiscal year 2012 or kick the can down the road with another continuing resolution to allow the government to pay its bills for another short period of time.
The threat of shutting the government down is the Armageddon needed to drive a deal.
No government operation has ever been so clearly and obviously set up to fail as “The Supercommittee.” (“Meanwhile – Back at the Hall of Justice”.) It was clear from day one that the whole point of the exercise was to kick tax and entitlement reform into 2013. Did they really think that we were all that dense that we wouldn’t notice?
Despite that I am afraid that a Rubicon has been passed. People are saying that “it really doesn’t matter” (despite the 250 point drop on the Dow.) Yet it does. It is an indication that WE JUST ARE NOT SERIOUS about government spending and getting our fiscal house in order. In a way the “Occupy Wall Street” Movement are the culprits. They provided a nice shiny “new thing” for the media to pursue and marginalize the Tea Party’s message of fiscal responsibility. The OWS crowd certainly did “change the conversation” but to what? Everyone on board with OWS are economic illiterates who seem to believe that goods and services are delivered to them by the Keebler elves. Everyone, including Paul Krugman, knows that beheading “the rich” is not the answer even if we confiscate every dime from every “rich guy” in the U.S. (By the way Paul – How much are you making?)
I didn’t expect much from Patty Murray and John Kerry. I did expect more from the GOP members of the late supercommittee. I was probably being overly optimistic but at least there could have been a gesture toward adulthood and common sense from that group.
Could it be that the Demonrats wanted the mission to fail so they could enjoy the status quo, blame the GOPhers for the stalemate,cut defense to a point where we cannpt defend ouselves and cut certain entitlements in order to provike street violence which might rationalize martial law and dictatorial rule by our little dictator-in-waiting?
And, could it be that the GOPhers wanted a stalemate to avoid, for the present, cutting anything; to put the blame on the Demonrats, to attempt to force cuts in welfare and Medicaid?
I’m looking for an intelligent, experienced, virtuous man for whom I can vote.
So far I have had 16 lanterns stolen. Ah, well…
Good thing there is 70.000 troops in Europe. Let’s keep them, but instead save funds on unimportant stuff like armored vehicles who will just save insignificant servicemen’s lives and such. What is important is to have a standing army payed by the US in Europe, the richest and most peaceful area in the world. That way the troops can hang out on the beach of Cote d’Azure and drive back and forth on the bases and work out nonstop in the gym.
The only thing that scares Congress is getting de-elected (and that can occur any number of ways: a scandal that gets them tossed (ala Anthony Weiner) or getting voted out). Congress scared by a financial crisis? Forget it – they can print money. 9+% unemployment? Doesn’t bother them one whit. People losing their homes? They keep right on a-fiddlin’ while America burns. Failing schools? They sleep just fine. Corruption, graft & special favors? All ingrained in the D.C. culture. Confiscatory tax rates? Hey, somebody has to pay for the pork and Democrat vote-buying.
Morse is right – Obama has shown ZERO leadership – he sat on the sidelines, which is fine if you’re a coach leading a team & calling plays, but the problem is Obama is neither calling plays but instead denigrating the other team. He wasn’t just twiddling his thumbs & watching the two teams throw mud, he joined in to throw his own brand of mud. Obama is damaging not only America, but the Democrat party brand.
“The American Medical Association (AMA) was promised by the Democrats that this annual problem would be permanently fixed in the Obamacare bill in return for the AMA support for the bill.
However, the doc fix was pulled from the Obamacare package because Democrats wanted to spend that money on other new benefits. So they promised the AMA it would be fixed in separate legislation right after Obamacare passed. The doctors now understand they were the victims of a bait-and-switch. The permanent doc fix never passed.”
I laughed out loud at that. Doctors are smart people and yet they fell for Democrat lies . . . TWICE? For being that gullible, they deserve at least a 30% cut. Haven’t they figured out Obama, Murray, Kerry, Pelosi, Reid, Schumer, Durbin, Rangel, Waters, et al lie every time they open their mouths? There’s only one chance Congress will ever balance the budget, and that’s if the people force them to through a State-by-State people’s ballot initiative for a Balanced Budget Amendment. As long as Democrats control the Senate or the House, a balanced budget is a pipe dream.
Actually, the “doctors” didn’t. The AMA did. The AMA hasn’t represented physicians in this country for….about 30 years! Maybe more.
The S C failed because it was never intended to work. How else to blame the GOP and lay the groundwork for tax hikes, and not just on the rich.
They didn’t fail. We get automatic budget cuts, unless the pigs vote otherwise.
“The super committee failed because they weren’t scared enough.”
Who writes such nonsense? My dog, who is 1.5 y/o was telling me yesterday that super committee failed because it was not designed to succeed. Indeed, he is very young so he does not know half the story. Indeed, the ‘super committee’ “failed”, presumably to cut spending, because it was specifically designed to THWART any attempt to do just that — cut spending. A Leftist would rather cut open his mother and barbecue the innards than “cut spending”. The whole thing has been, even to the young and inexpereienced eyes of my dog, a *hoax* and a *trap* sprung on GOP leadership. Or perhaps, as is more likely, they are complicit in the hoax.
Hey, the Federal Gummint can spend a LOT more money if we just cancel the permanent manned Mars base, the Lunar telescopic array, warp gates 1-6, and the Extraterrestrial defense grid.
Once that’s done, your new hip is on it’s way, Grams!
Bless your little hearts! Can’t you see it was all a farce from the beginning? They aimed at reducing the DEFICIT; not the DEBT, by 120 billion annually for 10 years. That still leaves an accumulative debt increase of over 14 trillion over the 10 years! In other words, double the present debt! And interest, in the tenth year, of 400 billion! Bankruptcy. Inflation, deflation, stagnation, whatever= BROKE.
Even if they had agreed the end result would have been catastrophe. Most of these fakers can count. And the ones who can’t can afford to hire someone who can.
There is a way, however, to get the debt/deficit problem solved quickly. Reconvene the greedy, slothful, evil slobs who failed and explain that unless they provide a viable methodology for: A. Ending all deficits immediately, and;B.Paying off the debt within 10 years; by November 30; on December 1 they will be shot.