Memo to Super Committee: Please fail
November 18, 2011 | Having itself failed to reach any kind of "grand bargain" to solve the "debt crisis" (a wholly manufactured calamity), Congress in its infinite wisdom delegated the task to a committee of 12, known as the Super Committee, charged with finding a way to eliminate $1.2 trillion in Federal debt — and do it by November 23. Or else!
Or else, automatic cuts would be triggered, evenly split between defense and domestic programs. The threat of such dire consequences was supposed to make the committee find a solution. In reality, the committee was doomed to fail from the git-go. The thought that the committee could find an agreement when Congres and the President could not was nothing but wishful thinking.
At this point, no deal is in sight, and that could well be the best possible outcome. To understand why that is so, it's important to consider two things:
First, what happens when Congress makes a big deal — a really, really big deal — at the last minute? The so-called deal never satisfies anybody, and it is invariably flawed. The members of Congress are so beholden to their special interests that no deal will really be what the country needs. Last minute, big deals usually have special favors buried in them that we only discover later. The unintended consequences are many and noxious. No deal is better than a bad deal.
More importantly, there can be little confidence that any deal would be remotely equitable. For weeks now the Democrats have been making one offer after another, to which the Repuglicans say "No, not nearly enough." The Democrats always end up giving away everything and getting nothing in return. There's little reason to expect this time to be any different.
Second, what happens if there is no deal?
Let's say the cuts did take place. Here's the breakdown:
A lot of those things like they probably should be cut. And then there's the other side of the agreement: a number of things are protected in the case of cuts:
That list looks to me like a pretty good set of priorities.
So, "do nothing" results in increased revenue and cuts to a bunch of things that should be cut. "Do something" runs the very great risk of a truly bad deal that will hurt people and our economy and make things much worse. My choice is clear.
Let's go back to that "wholly manufactured calamity" for a moment. Yes, the US has a large debt, and it can't be sustained forever. But there is no debt crisis. The US is still able to borrow money at ridiculously low rates (see below). The real crisis is that 13.9 million Americans (Bureau of Labor Statistics, October, 2011) don't have a job and little prospect of getting one any time soon. Another 8.9 million are working part-time, not by their own choice.
As of Friday, the federal government could borrow for five years at a real interest rate of -0.7 percent. Have you ever heard a bank quote you a real interest rate of -0.7 percent? Of course not. It would mean that once inflation is taken into account, the bank is paying you to borrow money. That just doesn't happen. But right now, it's happening for the United States government. The rest of the world -- cough, Europe, cough -- is considered so risky that the markets are begging us to keep their money safe.
Add to the picture the fact that, according to the most recent statistics from the census bureau, almost 50 million Americans live in poverty, and disproportionately more of those are children and seniors. Imposing austerity at this time will only worsen this picture. Arguably the richest country on earth should not be adopting policies that will make its citizens worse off.
The number of people who approve of the way Congress is doing its job is around 9%. It's a wonder the approval rating is that high. It's also a wonder that anybody bothers to vote. Wait a minute, more than half of eligible voters don't vote, actually.
Last updated on Jun 5, 2016