Never say never in Washington, but the chances that the so-called super committee will manage to strike a deal within the next few days seem slim. The committee has to have something in writing by Monday in order to meet its Wednesday deadline, and it has already missed, by weeks, the Congressional Budget Office's requested date to estimate the savings from any legislation. While lawmakers promise to soldier through and hope to beat the odds, privately aides express little optimism, with some expecting failure as an all-but-sure outcome. But what's not sure, for anyone, is what would happen after the super committee fails to present a plan.
In fact, some aides are quietly wondering if the super committee's failure will set up a perfect storm of showdowns during the lame-duck session of 2012, when Congress will have to tackle a host of issues ranging from the budget to the Bush tax cuts, possibly setting up the biggest policy showdown between Republicans and President Obama yet.
If the super committee fails, it will lose its super powers and become just another group of lawmakers. In the meantime, $1.2 trillion in automatic cuts, spread across defense, Medicare, and social spending, would be automatically enacted, but wouldn't go into effect until 2013. The latest parlour game in Washington is guessing whether, and how, Congress would alter or change those triggers. But whatever lawmakers do, most D.C. insiders don't expect them to do it until the end of 2012. With the elections just around the corner, it's hard to envision Congress taking major action on the deficit until December 2012.
But at that point, the super committee triggers will be only one of many issues coming to a head. The Bush tax cuts, extended for two years in 2010, will be set to expire at the end of 2012. There are the various tax incentives, breaks, and adjustments that Congress normally passes every year or so. Chances are, Congress will have to pass a budget to keep the government operating through 2013. And another debt ceiling hike will almost certainly be just around the corner in 2013. With a lame-duck Congress and, possibly, a lame-duck president, it's an unpredictable situation that could create a "Grand Bargain" to put a dent in the deficit--or it could cause chaos.
At this point, it's anyone's guess how the parties would approach the automatic cuts, which in theory were supposed to hit Democratic and Republican interests equally. Both House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid have said they wouldn't support undoing the automatic cuts (called "sequesters" in congressional lingo), whereas Republicans have suggested they could be tinkered with. "I would be committed to keeping the 1.2 [trillion dollars in cuts]. We've got 13 months to find a smarter way to do it," Texas Rep. Jeb Hensarling, the Republican co-chair of the committee, told CNBC earlier this week.
That's one possibility for the sequester, to change it but keep the overall debt savings target. Another possibility would be to pass a law doing away with the triggered budget cuts altogether, but this would be unlikely. It would be a defeat for Republicans, who promised to make drastic cuts as part of the debt ceiling hike, and could also trigger further credit downgrades for the United States, as further evidence that Congress can't get its act together. A final possibility would be to repeal part of the sequester. With Secretary of Defense Leon Panetta warning of harsh consequences for America's national security, there will likely be momentum for reversing the planned cuts to defense. But the politics of that get tricky, as Democrats aren't likely to agree with a proposal that puts all of the cuts onto their cherished programs.
But whatever happens, the super committee showdown may only be the beginning.