Countdown to Super Committee failure: T-minus six days

I figured we should have a post about this for the three readers who are still taking it seriously. Box: Checked.

The Budget Control Act, enacted last August to put an end to the debt-ceiling crisis, prohibits the Supercommittee from voting on a plan that has not been made available to the public and to the Congressional Budget Office for 48 hours before the vote.

Boil this down and do the math. This means that in order for the Supercommittee to reach a majority vote by midnight Nov. 23, members need to come up with a plan and make its language public by midnight Nov. 21. In other words, by next Monday.

Further complicating the tight deadline is the need for the nonpartisan Congressional Budget Office to score the proposal before the 12-member Supercommittee puts it to a vote.

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CBO says it’ll score this one quickly for the Committee, but even so, they probably need at least a weekend to run the numbers. That means the true deadline for submitting a proposal is Friday. Are the two sides close enough to make something happen before then? Given that Boehner and Reid are now being dragged into the negotiations in desperation, I’m thinking … no, probably not.

Still, there are an unusual number of gears turning inside this smoking, clattering contraption, so it’s worth paying some attention to it as it starts to fall apart. The first, obviously, is fiscal. Panetta’s warnings of a Pentagon meltdown have grown increasingly dire, which makes it impossible to believe that the automatic cuts will be allowed to go into effect. I don’t know what The One was thinking in talking tough about protecting them last week; if Congress sends a bill to his desk rescinding them, he’ll be forced either to cave or to cut Panetta off at the knees.

The second gear is economic. A Super Committee breakdown would likely increase the negative outlook on U.S. debt, but if Congress then goes ahead and rescinds the automatic cuts on top of it, it might prompt another immediate downgrade. (Which, of course, explains why President Downgrade is chilly to the idea of undoing the cuts, notwithstanding the effect on defense.) What that would do to markets, nobody knows. Probably nothing given that treasuries would still look safe relative to European debt given the tremors in the Eurozone, but possibly a few banks would start to wobble. How lucky do you feel?

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The third gear is political. The reason the GOP’s been keen to compromise by offering $300 billion in new revenue (via ending certain deductions and closing loopholes, not via raising rates) is because I think they’re worried about Obama gaining traction with the “obstructionist Congress” narrative. Remember, more than one poll last week showed that a chunk of the public, including many indies, believe Republicans are blocking O’s agenda in hopes of sinking the economy for electoral advantage. That’s a lethal meme if it catches on, so they’re countering it even by having Boehner speak out publicly in favor of new revenue at the risk of alienating Norquistians. (Rep. Bob Goodlatte went so far as to tell ABC today that accepting a small tax hike now might be worth it in order to avoid the large tax hikes that might inevitably result later.) The problem here is the Dems have less to lose from the Committee’s failure than the GOP does. The Pentagon cuts will hurt hawks more than doves, the lack of any tax reform means the Bush tax cuts will still be on schedule to lapse, and of course they’ll get to keep pushing their narrative about obstructionist Republicans. Even if no deal is reached, the GOP needs the public to understand that they tried really hard, which explains all the revenue messaging lately.

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And of course the fourth gear is institutional. Congress’s approval rating is already down to 13 percent, a record low. They’ve spent the past year bogged down in deadlocks, first on the annual budget and then on the debt ceiling. If even the Super Committee — the mechanism they designed to break the deadlock — deadlocks, it’ll shake the public’s faith in Congress even more deeply than it already has been. And if that deadlock comes paired with rescission of the automatic cuts, it’ll mean that their big effort to put a dent in spending actually ended up increasing spending by lifting cuts that were set to take effect. It’ll be pure farce, and total despair for fiscal conservatives. I’m not sure what would be worse — a clean collapse or the new half-assed compromise idea for the Committee to agree merely on numbers for new revenue and spending cuts and then send the matter back to congressional committees to fill in the blanks. That’s the equivalent of a punt returner catching the ball and then free-kicking it right back. Exit question: How much more embarrassing can Congress get before we start hearing people talk seriously about constitutional reforms?

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