The Joint Committee for Deficit Reduction (Super Committee) is responsible for putting together a package that reduces the nation’s debt by at least $1.5 trillion over the next 10 years. Seven of the committee’s 12 members must agree to a plan, to be fast-tracked for an up or down vote (simple majority) in both houses of Congress, with no allowances for amendments. The Super Committee must vote on a package by November 23 and report to Congress by December 2. Congress must then vote on it by December 23.
The Super Committee is allowed to meet the $1.5 trillion target through a combination of spending cuts, tax increases, and entitlement reforms. Meanwhile, if the committee fails to come up with a package that meets the mandate—or if the package subsequently fails to pass in Congress—then automatic spending cuts of $1.2 trillion will begin in January 2013 and continue over the next decade. The mandatory across-the-board cuts, also known as “sequestration” in legislative lingo, were built into the original debt limit agreement approved in August.
Consistent with past bipartisan precedent/practice established in the 1980s, the automatic cuts triggered by failure are seen as draconian by many, and split evenly between defense and domestic programs (both entitlement and discretionary). Funding to critical programs like infrastructure, education, public health (i.e. medical research, HIV/AIDS, disease prevention, etc.) and a host of other discretionary programs will be severely cut or sharply reduced...while Medicaid, Social Security, unemployment insurance and civilian/military retirement—which are exempt from the trigger—would be left untouched. Likewise, any cuts to Medicare would be capped and limited, and tax subsidies are exempt from the automatic cuts. That means oil and gas subsidies—along with subsidies for homeowners, retirement savings, business start-ups, etc.—will remain in place.
The automatic cuts are often discussed in Washington as if they’re certain, as if Congress cannot prevent their inevitability. In reality, federal budget deals have seldom, if ever, gone the distance intact… Most often they have been changed, waived, ignored, or even abandoned altogether. Put more simply: the across-the-board spending cuts may never go into effect.
The committee’s task, while daunting, is made even more difficult by a divided Congress and ongoing battles about federal healthcare reform, along with a presidential campaign season that is already in full swing. Meanwhile, Senate Democrats may well be adding to the complexity of the issue. Indeed, the Joint Committee for Deficit Reduction itself was the brainchild of Senate Majority Leader Harry Reid (D-NV), who therefore has a vested interest in the Super Committee’s success, an interest that may not jive with that of a diverse Democratic Party. Some rank and file Democrats—particularly in the House—are beginning to posit that a Super Committee failure would be preferable to a “bad” deal crafted by the panel.
The Constitution is not on the side of those pushing for automatic cuts. Under Article I, Section 7, each Congress has an equal right to legislate. So the 112th Congress can pass a bill setting the federal deficit for this year and next year (2011-12), but that’s about it. Anything that goes beyond the first week of January 2013, when the 113th Congress will be sworn in, is subject to change by that Congress, and every subsequent Congress.
OVERALL IMPACT ON TASC PROVIDERS (AND CUSTOMERS): LITTLE TO NONE! At present it appears that we will not be affected by the auto-cuts, although the consequences of the Super Committee’s work are as yet unknown. TASC’s Governmental Affairs team will continue to monitor the proceedings and keep you informed of any changes.