The creation of the Congressional “supercommittee” last August was a major victory for Washington’s austerity class. It was shrouded in secrecy, exempted from regular Congressional rules and required to choose between two unpopular options in order to enact $1.2 trillion in savings: a so-called grand bargain that would significantly curtail the social safety net vs. deep, automatic across the board cuts at a time of economic peril.
Yet the $1.2 trillion in savings, which will come on top of the $2 trillion in deficit reduction already enacted during the Obama administration, is not enough for some members of the austerity class. For months groups like the Committee for a Responsible Federal Budget (CRFB) have been urging the supercommittee to “go big” and enact a $4 trillion deal. Eighty House members, lead by Representatives Mike Simpson (R-ID) and Heath Shuler (D-NC), echo that sentiment in a soon-to-be-released letter. The CRFB even argued that tripling the size of the supercommittee’s mandate “increase the chances of success.”
I find that very hard to believe. During the debt ceiling fiasco John Boehner rejected President Obama’s $4 trillion grand bargain offer and Republicans have only hardened their position since then, with every major Republican presidential candidate saying they would oppose a deficit plan that was even 10:1 spending cuts to tax increases. Believing that a $4 trillion deal can be reached given the current level of GOP intransigence is borderline insane.
Indeed, this week committee Republicans immediately rejected Senator Max Baucus’s $3 trillion debt rejection offer, which included $500 billion in proposed cuts to Medicare and Medicaid. (The triggered cuts—which exempt Medicaid, Medicare and Social Security and require that half the savings come from defense spending—will likely be far more palatable to progressives than any type of grand bargain).
By relentlessly pushing the $4 trillion number, which they claim is needed to stabilize the US debt-to-GDP ratio, the austerians are setting the supercommittee up for failure. That way the austerity class can continue to bang the drum for more and more deficit reduction, writes David Dayen of Firedoglake.
We’ll ALWAYS need $4 trillion. Without that big and urgent a need, you cannot cut things like Social Security or Medicare. You cannot acknowledge the deficit reduction that’s already taken place. You cannot acknowledge the fact that doing nothing would bring the medium-term deficit almost entirely into balance. You cannot acknowledge that the debt situation is trivial relative to the jobs crisis. You must only repeat $4 trillion, $4 trillion, $4 trillion over and over again like a mantra.
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Indeed, the “go big” campaign is totally divorced from political and economic reality. Stan Collender, a longtime budget expert at Qorvis Communications, notes three reasons why:
“One, the supercommittee is going to have enough trouble coming up with $1.2 trillion,” says Collender. “Two, if they did come up with $1.2 trillion, it should be considered an extraordinary success, not what the Concord Coalition and CRFB would consider a failure. Three, it’s a supercommittee, not a super hero…. Take half a loaf and go home. $1.2 trillion, on top of the deficit reduction that’s already enacted, would be an extraordinary achievement.”
Aside from the utter unfeasibility of enacting such a plan, the austerity class never mentions the impact a $4 trillion deficit reduction accord would have on the economy in the midst of a recession, particularly if it were weighted heavily toward spending cuts (as is likely to be the case). The IMF recently reviewed 173 cases of austerity over thirty years and found that austerity “lowers incomes in the short term, with wage-earners taking more of a hit than others; it also raises unemployment, particularly long-term unemployment.”
The Washington Post’s Brad Plumer summarized the rest of the report:
An austerity program that curbs the deficit by 1 percent of GDP reduces real incomes by about 0.6 percent and raises unemployment by almost 0.5 percentage points. What’s more, the IMF notes, the losses are twice as big when the central bank can’t cut rates (a good description of the present.) Typically, income and employment don’t fully recover even five years after the austerity program is put in place.
In the wake of the Occupy Wall Street protests, media coverage of the country’s unemployment crisis has expanded drastically on cable news (from a mere 502 mentions of “unemployed” or “unemployment” on CNN/FOX/MSNBC in the last week of July to 2,378 mentions of “jobs” from October 10–16), while coverage of the debt has dropped dramatically (from 7,583 mentions in July to 398 mentions in October). But inside the supercommittee, it’s like the protests, or the economic crisis, never happened.
The fact that creating jobs is absent from the committee’s mandate illustrates just how isolated it is from the economic situation today. Last month, Senator Jeff Merkley proposed a very sensible idea: any proposal from the committee should be evaluated by the Congressional Budget Office to see what impact it would have on jobs and to make sure it would not increase the already high unemployment rate. You’d think leaders in Congress would have already thought of that. But to date, Merkley’s proposal has only eleven cosponsors. No wonder the disconnect between Congress and the public grows wider every day.