Wednesday, November 30, 2011

Why I Hope Congress Continues to Do Nothing - The Beautiful Double Trigger

As you may recall, last week, just before Thanksgiving, the Super Committee announced that they couldn't reach agreement - which I had predicted as both the most likely and most desirable outcome. So, score one for me and score one for a do-nothing Congress that, at least, is starting to abide by the Hippocratic Oath to Do No Harm.

Well, here's hoping that Congress continues to do nothing, and by doing nothing, will 1) decrease the U.S. deficit by more than the Super Committee ever dreamed of doing and 2) advance a progressive political agenda.

But wait, you say, this is a bizarre occurrence, especially with the Republican-led House - how did this come to pass?

Ezra Klein explains:
In August, Republicans scored what they thought was a big win by persuading Democrats to accept a trigger that consisted only of spending cuts. The price they paid was 1) concentrating the cuts on the Pentagon while exempting Social Security, Medicaid, Medicare beneficiaries, and 2) delaying the cuts until January 1, 2013. That was, they figured, a win, as it eschewed taxes. Grover Norquist's pledge remained unbroken.
But 12 years earlier, George W. Bush had set a trigger of his own. In order to pass his tax cuts using the 51-vote budget reconciliation process, he had agreed to let them sunset in 2010. A last-minute deal extended them until the end of 2012.
So now there are two triggers. One is an extremely progressive spending trigger worth $1.2 trillion that goes off on January 1, 2013. The other is an extremely progressive tax trigger worth $3.8 trillion that goes off on ... January 1, 2013. If you count reduced interest payments, the two policies alone would reduce future deficits by about $6 trillion.
$6 trillion in deficit reduction, and distributed far more progressively than any proposal advanced by either the Democrats or Republicans, since half of the spending cuts come from military spending, and increased revenue outmatches spending cuts by a 3:1 ratio. Just how much more progressive are the dual triggers than anything else proposed thus far? Check out the numbers:

It seems the Republicans have painted themselves into a bit of a corner, eh? The best part is - the Republicans can't stop either of triggers on their own! If either the Senate Democrats or President Obama choose to block an attempt to dismantle these triggers, then triggers go off. Obama has already said that he's not interested in renegotiating the spending cuts. The Bush tax cuts will undoubtedly be a big issue in the 2012 Presidential race, so we'll just have to see how that shakes out.

Admittedly, the triggers aren't ideal, if they come to pass - the 50% of the spending cuts that come from non-military spending are unintelligent, across-the-board cuts, and much of the increased revenue comes from the middle class, in addition to the very wealthy. But still, faced with a Republican party that practically refuses to negotiate in good faith, letting the dual triggers fire is probably the best option - especially if you're a lame duck President Obama or lame duck Congress, both of which are possible in late 2012 / early 2013.

So, let's all call our Congressional Representatives and encourage them to .... do nothing!

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