Last week’s Fiscal Fitness asked what would happen if the Joint Committee on Deficit Reduction — the super committee that has yet to demonstrate in any way that the name is appropriate — failed? In case you don’t remember, the answer was — and still is — not much, and very possibly nothing at all.
This week’s Fiscal Fitness addresses the parallel question that seems to be much on the minds of true believers of the process, especially those who went out of their way to let me know their thoughts after last week’s column was published: Why does anyone think the super committee has to succeed?
Those who are wishing, hoping and praying for the super committee’s success seem to be basing their reasoning on four things.
First, super committee supporters say that voters won’t forgive Congress if the end result of the process is that the deficit isn’t reduced as promised.
Second, they insist that members of the committee will be embarrassed (their word, not mine) if they fail to agree on some type of deficit reduction plan.
Third, they say Congress as a whole will be embarrassed if the House and Senate fail to pass what the super committee approves and reports. They almost immediately add that the embarrassment will be significantly magnified because of all the other budget-related failures that have occurred during the past year. This includes the repeated threats of government shutdowns and the close-to-the-edge approval of a debt ceiling increase.
Fourth, true believers typically say with great passion that Wall Street will downgrade U.S. debt again if the super committee fails. This reason was repeated often during the past week after Merrill Lynch said a further downgrade was likely if the super committee process didn’t result in a deficit reduction plan being enacted.
I just don’t see it.
Let’s start with voters. Contrary to what the true blues say, the deficit reduction proposals the committee would have to recommend to make more than a token reduction in the deficit will be extremely unpopular. The polls continue to be as definitive on this issue as they have been for more than a decade: While a majority of Americans want spending reduced, they typically don’t support cuts in any part of the budget other than foreign aid. The polls also show that Americans don’t want taxes raised unless the increase is imposed on someone else.
That makes the argument that voters will be angry if nothing happens hard to believe. In fact, unless the polling on the federal budget has been consistently wrong, voter anger will be far greater if the super committee agrees to a deficit reduction plan that includes changes in Medicare, Medicaid, military spending and taxes than if there’s no agreement at all.
This point — that voters continue to want the deficit reduced but don’t like almost any of the things that would actually reduce the deficit — also belies the notion that the super committee and Members in general will be embarrassed if the process craters and nothing happens. In fact, when the committee’s Republicans and Democrats last week each publicly released plans that were obviously intended to play to their separate constituencies rather than bridge differences, we had the strongest signs yet that the opposite is true.
The members of the super committee and the political parties they represent clearly see embarrassment over not reducing the deficit as far less of a problem than the anger they would provoke if they agreed to a plan that their base considered a personal betrayal.
It’s even easier to disagree with the reasoning related to a downgrade of U.S. debt. No doubt some Americans were mortified this summer when Standard & Poor’s announced its downgrade and preferred that it not have happened. But it’s hard to see how most (any?) were so negatively affected directly and personally by the downgrade that they’ll do anything now to avoid another. Contrary to some speculation, the downgrade did not cause interest rates, which have the most immediate effect on individuals and businesses, to rise. In fact, rates fell.
And that assumes that most voters were/are even aware of the S&P announcement.
It’s hard to make the case, therefore, that another downgrade is feared or that a deal that prevented it would be politically more popular than a deal that increases taxes or cuts Medicare or the Pentagon.
I truly hope that I’m completely wrong about this. I’d like nothing better than to be surprised by the super committee and to see a long-term deficit reduction plan adopted by the late December deadline set in the Budget Control Act. If that happens, the headline on that week’s Fiscal Fitness will be “I Was Completely Wrong” in the largest boldface font Roll Call will let me use.
But the four reasons the super committee’s supporters cite just don’t provide much confidence that will happen. Instead, they reinforce the notion that the super committee process is less — rather than more — likely to succeed and fueled more by wishful thinking than by careful analysis.
Stan Collender is a partner at Qorvis Communications and founder of the blog Capital Gains and Games. He is also the author of “The Guide to the Federal Budget.”