August 29, 2011 / 8:31 PM / 7 years ago

Q+A: Can the "super committee" get a budget deal?

WASHINGTON (Reuters) - Congress may have averted default through a last-minute budget deal that will enable the government to extend its borrowing authority, but much of the hard work remains.

Congress offloaded much of the painful decision-making to a “super committee” of 12 lawmakers, who must come up with a budget deal by Thanksgiving.


The Joint Select Committee on Deficit Reduction, as it is formally known, is tasked with finding at least $1.2 trillion in budget savings over a 10-year period. This is the second phase of budget savings outlined by an early August deal that raised the country’s borrowing authority.

The 12-member committee — six Democrats and six Republicans from the House of Representatives and Senate — needs to come up with a plan and vote on it by November 23. If a majority of the committee backs the plan, Congress would have until December 23 to hold an up-or-down vote on it.

Automatic spending cuts would kick in if the committee can’t reach a deal.


Theoretically, the committee could narrow budget deficits any number of ways — by raising taxes, cutting agency budgets or trimming benefit programs and other spending that continues automatically from year to year.

Realistically, the committee’s options are more limited. The first phase of the August debt ceiling deal would save about $900 billion over 10 years by capping the growth of discretionary spending, which covers the budgets of agencies like the Defense Department and the Environmental Protection Agency. These caps would push such spending down to 6.1 percent of the economy by 2021, according to the Congressional Budget Office, the lowest level in decades. Lawmakers will have a hard time lowering them any further.

That leaves the tax code and entitlement spending. Outside budget experts say that both tax hikes and benefit cuts are needed to get the country on a sustainable fiscal path, but the politics are difficult.

Democrats say they won’t agree to entitlement reforms unless Republicans agree to tax increases. Republicans have said in the past that they won’t agree to tax increases.

The two sides weren’t able to break this stalemate during the debt-ceiling debate, and many observers question whether this new committee will have any more success.


“An agreement by the committee and approval by Congress is not that far-fetched. I think it’s doable,” said Greg Valliere, chief political strategist at Potomac Research Group who puts the odds of success at 40 percent.

On the negative side, lawmakers will be under increasing pressure to avoid compromise as the 2012 election cycle heats up. A deal that raises taxes and cuts benefits takes away potent campaign issues for Republicans and Democrats alike.

Many of the committee members are veterans of previous budget panels and are familiar with the issues at hand. Spanning the spectrum from liberal to conservative, they have been chosen more for their party loyalty than their willingness to compromise.

On the plus side, that means the committee could have an easier time selling any agreement to their rank and file.

Standard & Poor’s August downgrade of the U.S. credit rating and downgrade threats by other credit-rating agencies also will serve as a strong incentive.

“I think that downgrade was a heck of a wake-up call,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “There are more downgrades in our future if we don’t change course.”

With Congress’ approval rating at a historic low, lawmakers may be eager to show voters that they can in fact compromise.

The impasse over taxes and benefits may not be as intractable as it seems. Over the past several months, Republican leaders have indicated that they could back some sort of agreement that could lead to an increase in tax revenues.

Committee member Dave Camp, a Republican who heads the House’s tax-writing committee, did not rule out tax increases this month in an interview with Reuters.


The automatic spending cuts, another $1.2 trillion over 10 years, would fall equally on domestic programs beloved by Democrats and military programs beloved by Republicans, further pressuring agency budgets that will already be under severe strain.

Those cuts wouldn’t kick in until early 2013, giving Congress a full year to come up with a deal and get it passed.

Keep in mind the committee’s goal of at least $1.2 trillion in budget savings isn’t absolute. The actual goal is closer to $900 billion as Washington budget rules allow participants to count savings from reduced interest costs.

Editing by Xavier Briand

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