COMMENTARY

The supercommittee's 'do nothing' path to success

Alan Balutis is senior director and distinguished fellow at Cisco Systems' Internet Business Solutions Group.

Years ago, I worked closely with the National Conference of State Legislatures and spent time in the state capitals where the NCSL leaders were located. One of those cities was Austin, Texas, where I had the chance to enjoy the culture, the night life, the food and a wonderful publication, Texas Monthly.

The magazine published an annual assessment of the state legislature, not unlike what Washingtonian magazine does for Congress. The Texas Monthly included the usual categories: smartest, dumbest, best and worst dressed, and so on. But it also included a category I haven’t seen anywhere else called “10 Pieces of Furniture,” which was reserved for legislators who did so little that they couldn’t even be evaluated.

Recalling that category gives me great hope after the recent failure of the badly misnamed supercommittee to reach an agreement on a deficit reduction deal after four months of meetings and partisan wrangling. The only thing the committee could agree on was a short statement issued at the group’s legislative deadline that said they had given up: “We end this process united in our belief that the nation’s fiscal crisis must be addressed.”

Although united in that belief, they failed to produce the $1.2 trillion in cuts needed to avoid sequestration — automatic cuts that will be triggered in January 2013 if there is no budget deal by then. Committee members failed to “go big” by aiming for $4 trillion in cuts, as they were encouraged to do by the White House and others. They failed to agree on a balanced package of long-term spending cuts and tax increases to begin bringing the deficit down. They failed to agree on short-term measures to boost the economy. They failed even to clarify the issues or suggest new areas of common ground that could pave the way for a deal down the road.

And now they are poised for success. How? On Jan. 1, 2013, sequestration kicks in, making $1.2 trillion in predetermined budget cuts with half coming from the Defense Department and none from Social Security, Medicaid and Medicare benefits. Those Pentagon cuts, when combined with other reductions agreed to earlier, would reduce military spending by about $1 trillion over the next decade. Defense Secretary Leon Panetta has called such reductions a doomsday scenario. Of course, DOD officials and outside experts say it is just the beginning of a prolonged fight over which items to cut.

On that same date, the George W. Bush-era tax cuts also expire, producing almost $4 trillion in additional revenue. If you count reduced interest payments, some Medicare cuts and the expiration of stimulus programs, the nation’s fiscal picture will improve by about $7.1 trillion in the next 10 years, according to the Center on Budget and Policy Priorities. That is beyond “going big.” It is far more than anything the supercommittee, President Barack Obama or House Speaker John Boehner (R-Ohio) ever considered proposing.

What is needed for this rather balanced and progressive package of budget reductions and revenue enhancements to take place? Nothing. Congress simply needs to do nothing for the next few years. With a presidential election coming and Republicans eyeing the possibility of taking control of the Senate, that seems quite doable. In fact, it’s what our government does best these days.

Call me an optimist, but I think we have them right where we want them.

About the Author

Alan P. Balutis is senior director and distinguished fellow at Cisco Systems.

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Reader comments

Mon, Dec 12, 2011 Stan Jenkins Morgantown, WV

Absolutely NONE of the additional revenue described in the article will come about if there are not adequate numbers of working people and businesses working at a profit. Tax revenues rely on working people and working businesses. The article assumes employment will remain the same or better.

Fri, Dec 9, 2011 Midwest

As a civilian DoD employee I'm not sure optimism is called for. There is nothing balanced about the automatic cuts. Looking at the bigger picture, what is the point of subsidizing millions of people when we can't keep them safe? That is the result of cutting defense spending while protecting social programs. I'm very disappointed that Congress failed - both in the supercommittee and the construct which birthed the outcome. At a personal level I will feel the impact of their failure. My hope is that we won't feel the impact at a national level because it will be a catastrophe if we do.

Fri, Dec 9, 2011 C Marschner Hagerstown

Dr. Atkinson: The majority of the Bush tax cuts 3 trillion dollars worth were spread across the middle tiered incomes and also provided large increases in those paying negative taxes. While I will admit those in the 1% got a much bigger individual cut in terms of actual dollars, the total amount spread across this group amounted to only 700 billion. How many people wound up with no tax liability at all? The same logic that suggests giving a higher percentage increase in taxes to a high income person must also be used when evalauating the cut for the lower income. If the negative impact of a tax increase on the lower income person is greater then so too would the benefit for them be greater for an equivalent percentage tax cut. Which is exactly what transpired under the Bush tax cust. If we evaluate the proportionality of the tax cut benefits as a percent of taxes actually paid you will find that the top 1% got a smaller piece of the total cut than did the average taxpayer. We need to spend more time on facts than spin.

Fri, Dec 9, 2011 Dennis Mobile, AL

Folks, I am a federal white collar, middle class worker, and my tax returns show that the Bush era tax cuts benefitted me greatly. If you are a white collar federal worker I can't see how they didn't help you either. You are either lying or you have no idea how much tax you pay, which is something you should know. Pull out your returns and look at your tax bill as a percentage of gross income and AGI. However, the corporate world continues to be increasingly tax favored and is shifting even more of it's burden onto you, which is exactly what the Dems and Repubs let happen.

Fri, Dec 9, 2011 George

Alan,Once again your logic is impeccable

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