New Friends and a Big Deal

The co-chairs of the 12-member supercommittee never had met. Now they have to comfortable enough with each other to agree on how to cut more than $1 trillion from the federal budget by Thanksgiving.In what could be considered an arranged political marriage, Senator Patty Murray (D-WA) and Congressman Jeb Hensarling (R-TX) have the daunting task of leading efforts to find between $1.2 and $1.5 trillion in deficit reduction. It’s hard to believe that the two co-chairs of the Joint Select Committee on Deficit Reduction had never met before the committee assembled for the first time on September 7.

Handpicked by their respective caucus and party leaders, the two are like apples and oranges. Hensarling is a staunch conservative who has a strong record of fighting to end earmarks and reduce federal spending. Murray is his ideological opposite, standing firm on the importance of channeling federal dollars to specific projects. Ultimately, the two don’t have to agree or become best friends. They just have to steer the other 10 members toward an agreement that can pass the GOP-controlled House and Democrat-controlled Senate.

The pressure is on. Murray and Hensarling have approximately 10 weeks to produce a grand bargain, so most would prefer they forego forming a strong bond and focus solely on the task at hand. The so-called supercommittee must gather and study expert opinions, work out differences, craft a proposal, receive a score from the Congressional Budget Office (CBO), and manage the politics to adopt a deficit reduction plan that trims at least $1.2 trillion over the next decade — all by November 23.

Failure to agree on a comprehensive deficit reduction package could have dire consequences, including major cuts in entitlements and defense spending — an outcome that both Democrats and Republicans will abhor. As a result, the scale actually tips in favor of a big, balanced deal. Here's why:

First, if the committee comes up empty-handed, it would reinforce public perception that Congress is unable to compromise and address the nation’s greatest challenges. In the latest CNN/Opinion Research Corporation national poll, the public approval rating of Congress hit an all-time low of 14 percent. The supercommittee needs to prove it is indeed super to pump up the congressional image.

Second, both parties are concerned about the implications of the exploding national debt, but differ on how to best address the issue. The opposing sides must reach a compromise on entitlement reform and taxes before a responsible deal can be reached.

Third, Members of Congress do not like giving up their control, especially to federal bureaucrats. Should the committee fail to agree on a proposal or offer less than $1.2 trillion in cuts (about $900 billion), control will shift to the Office of Management and Budget (OMB). Under this “sequester” process, the OMB would be responsible for making automatic, across-the-board cuts for both discretionary and mandatory spending to make up the difference. The cuts would equally affect defense and non-defense spending and begin in fiscal year 2013. With this scenario in mind, Republicans will work overtime to protect defense programs and Democrats will do the same for entitlement programs. As chair of the Senate Veterans Affairs Committee and with the strong military presence in Washington State, Murray will fight to protect defense programs and provide a balanced approach to any potential defense cuts.

The recent CBO report on the “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act” offers a glimpse of what cuts across-the-board would look like if the joint committee does not produce legislation.

  • Reductions ranging from 10 percent (in 2013) to 8.5 percent (in 2021) in the caps on new discretionary appropriations for defense programs, yielding total outlay savings of $454 billion.
  • Reductions ranging from 7.8 percent (in 2013) to 5.5 percent (in 2021) in the caps on new discretionary appropriations for non-defense programs, resulting in outlay savings of $294 billion.
  • Reductions ranging from 10.0 percent (in 2013) to 8.5 percent (in 2021) in mandatory budgetary resources for nonexempt defense programs, generating savings of about $0.1 billion.
  • Reductions of 2.0 percent each year in most Medicare spending because of the limit to a maximum 2 percent cut that applies to that program, producing savings of $123 billion, and reductions ranging from 7.8 percent (in 2013) to 5.5 percent (in 2021) in mandatory budgetary resources for other nonexempt non-defense pro- grams and activities, yielding savings of $47 billion. Thus, savings in non-defense mandatory spending would total $170 billion.