The "Super Committee" Does Nothing
In recent days, we have continued to ponder the concerns of the Occupy movement, and we were starting to prepare an article based on an important statement issued a week ago by the Right Rev. Mark Sisk, Episcopal Bishop of New York. We have in mind to combine quotes from his statement with some recently published information on inequality, poverty and economic mobility.
However, we have to put that off a bit in order to stop and comment on our Congress.
Last summer, during the budget and debt-ceiling brouhaha, their actions consisted of a stop-gap bill along with the appointment of a special "Super-Committee", which was given the mission of designing spending and tax measures that would halt the exorbitant expansion of our national debt. This bi-partisan blue-ribbon group was to report by November 23 and its decisions were to have been accepted and ratified as is, without amendment, by the Congress before December 23. Instead, the committee announced late Monday afternoon that they have been unable to reach any agreement – about anything.
Good grief.
We've consulted conservative and liberal press reports, and both sides express the same disgust we just did. It's really discouraging, just before Thanksgiving, to feel such disdain for our national leadership.
The Washington Post neatly summarizes the deadlock: "Although Republicans offered to raise taxes by $300 billion over the next decade, they insisted on conditions that all but guaranteed that the wealthy would not be hit hard. And Democrats refused to agree to deep cuts in spending on health care for the poor and the elderly unless the rich were forced to make greater sacrifices."[1]
Always understand that "raising taxes" and "cutting spending" are meant in these usages to be relative to baseline projections, not current levels. So no one is talking about an absolute decrease in Medicaid or Medicare spending, but about a reduction in the growth rate of those programs. Further, it is widely accepted by many on both sides that some orderly restraint of medical expenditures is needed and there have been concrete proposals from others to start work toward that end.
The concept of taxing the "wealthy" is fuzzier. As you have read in this blog before, the "wealthy" pay a good portion of our taxes now and that share has increased since the Bush Tax Cuts were enacted in 2001. Even so, it is argued by many that allowing these tax cuts to expire at the end of 2012, at least for upper income brackets – so their taxes go up – is one of fairest ways to restrain our budget deficit.
Apparently over the past three months, no progress was made in finding routes to compromise on these issues. Reuters news service indicates that a number of secret sessions worked toward "trust building" among committee members, but the evidently premature leak of one specific proposal to the press about two weeks ago eroded much of that effect.[2]
Even as the Super Committee failed to do its job, several major issues will present themselves to Congress during December. A collection of current tax breaks will expire on December 31, most notably the reduction in the payroll tax rate every employee is currently enjoying. So everyone across the income board will see some tax increase in their first January paycheck. Companies have been writing off the value of business investments in new capital equipment all at once for tax purposes and that will end. A special tax credit for other business R&D will end. And the extended unemployment insurance benefits – out to 99 weeks – will expire, reverting to 26 weeks. In the ordinary course of annual budget work, a temporary spending authorization expires in mid-December and will need to be renewed or individual department appropriations bills will need to be enacted all at once to avoid a government shutdown. Then, by next spring, the debt will reach the current debt ceiling, and we will need to go through some process of raising it again. Since that will be in the middle of the Republican primary season and on the edge of the major campaigning, it seems hard to visualize that definitive work will occur at that time on long-term solutions. Spending cuts, especially in defense, were mandated in last August's "stop-gap" legislation, subject to Super Committee over-ride; since the Committee did not act, those will take effect, but that won't happen until January 2013.[3]
We keep looking today as we write for some constructive conclusion. Perhaps one of you can offer one. Our government is not alone in facing these disputes and having trouble working through them. Virtually all of Europe is up against the same kinds of issues, and they have largely been unable to compromise toward a positive end either. In the U.S. this inaction has been combined in the last several days with further revelations about the way many Members of Congress become personally rich while in office; they can make their own personal investments based on information they receive from companies, regulators and institutions as part of their work.[4] For the rest of us, that practice is called "trading on inside information" and it is illegal. But Congress is exempt from those laws. As some have said lately, if you want to find some of the now-infamous 1%, go to Capitol Hill.
____________________________
The footnotes that follow are just ordinary news stories. But we cite them to indicate in particular that the information and concern indeed come from media known to lean both toward the Left and toward the Right. It's not often one finds such agreement. A headnote to the Insider Trading story in [4] says that both the Republican Speaker of the House and the Democrat House Minority Leader objected to the "60 Minutes" story. Legislation has already been introduced to correct the situation. We'll see.
However, we have to put that off a bit in order to stop and comment on our Congress.
Last summer, during the budget and debt-ceiling brouhaha, their actions consisted of a stop-gap bill along with the appointment of a special "Super-Committee", which was given the mission of designing spending and tax measures that would halt the exorbitant expansion of our national debt. This bi-partisan blue-ribbon group was to report by November 23 and its decisions were to have been accepted and ratified as is, without amendment, by the Congress before December 23. Instead, the committee announced late Monday afternoon that they have been unable to reach any agreement – about anything.
Good grief.
We've consulted conservative and liberal press reports, and both sides express the same disgust we just did. It's really discouraging, just before Thanksgiving, to feel such disdain for our national leadership.
The Washington Post neatly summarizes the deadlock: "Although Republicans offered to raise taxes by $300 billion over the next decade, they insisted on conditions that all but guaranteed that the wealthy would not be hit hard. And Democrats refused to agree to deep cuts in spending on health care for the poor and the elderly unless the rich were forced to make greater sacrifices."[1]
Always understand that "raising taxes" and "cutting spending" are meant in these usages to be relative to baseline projections, not current levels. So no one is talking about an absolute decrease in Medicaid or Medicare spending, but about a reduction in the growth rate of those programs. Further, it is widely accepted by many on both sides that some orderly restraint of medical expenditures is needed and there have been concrete proposals from others to start work toward that end.
The concept of taxing the "wealthy" is fuzzier. As you have read in this blog before, the "wealthy" pay a good portion of our taxes now and that share has increased since the Bush Tax Cuts were enacted in 2001. Even so, it is argued by many that allowing these tax cuts to expire at the end of 2012, at least for upper income brackets – so their taxes go up – is one of fairest ways to restrain our budget deficit.
Apparently over the past three months, no progress was made in finding routes to compromise on these issues. Reuters news service indicates that a number of secret sessions worked toward "trust building" among committee members, but the evidently premature leak of one specific proposal to the press about two weeks ago eroded much of that effect.[2]
Even as the Super Committee failed to do its job, several major issues will present themselves to Congress during December. A collection of current tax breaks will expire on December 31, most notably the reduction in the payroll tax rate every employee is currently enjoying. So everyone across the income board will see some tax increase in their first January paycheck. Companies have been writing off the value of business investments in new capital equipment all at once for tax purposes and that will end. A special tax credit for other business R&D will end. And the extended unemployment insurance benefits – out to 99 weeks – will expire, reverting to 26 weeks. In the ordinary course of annual budget work, a temporary spending authorization expires in mid-December and will need to be renewed or individual department appropriations bills will need to be enacted all at once to avoid a government shutdown. Then, by next spring, the debt will reach the current debt ceiling, and we will need to go through some process of raising it again. Since that will be in the middle of the Republican primary season and on the edge of the major campaigning, it seems hard to visualize that definitive work will occur at that time on long-term solutions. Spending cuts, especially in defense, were mandated in last August's "stop-gap" legislation, subject to Super Committee over-ride; since the Committee did not act, those will take effect, but that won't happen until January 2013.[3]
We keep looking today as we write for some constructive conclusion. Perhaps one of you can offer one. Our government is not alone in facing these disputes and having trouble working through them. Virtually all of Europe is up against the same kinds of issues, and they have largely been unable to compromise toward a positive end either. In the U.S. this inaction has been combined in the last several days with further revelations about the way many Members of Congress become personally rich while in office; they can make their own personal investments based on information they receive from companies, regulators and institutions as part of their work.[4] For the rest of us, that practice is called "trading on inside information" and it is illegal. But Congress is exempt from those laws. As some have said lately, if you want to find some of the now-infamous 1%, go to Capitol Hill.
____________________________
The footnotes that follow are just ordinary news stories. But we cite them to indicate in particular that the information and concern indeed come from media known to lean both toward the Left and toward the Right. It's not often one finds such agreement. A headnote to the Insider Trading story in [4] says that both the Republican Speaker of the House and the Democrat House Minority Leader objected to the "60 Minutes" story. Legislation has already been introduced to correct the situation. We'll see.
[1]Lori Montgomery & Paul Kane, "Supercommittee announces failure in effort to tame debt," The Washington Post, November 21, 2011. www.washingtonpost.com. Accessed November 22, 2011.
[2]Richard Cowen, et.al., "Insight: Super Committee Had Glimpse of Elusive Compromise", www.reuters.com. November 22, 2011. Accessed November 22, 2011.
[3]Wall Street Journal Research, "Looking Ahead" [box attached to "Debt Panel Fails to Reach Deal"]. www.wsj.com. Accessed November 21, 2011.
[4]Steve Kroft, "Congress: Trading Stock on Inside Information?" CBS "60 Minutes". Segment aired November 13, 2011. Web transcript: http://www.cbsnews.com/8301-18560_162-57323527/congress-trading-stock-on-inside-information. Accessed November 22, 2011.
[2]Richard Cowen, et.al., "Insight: Super Committee Had Glimpse of Elusive Compromise", www.reuters.com. November 22, 2011. Accessed November 22, 2011.
[3]Wall Street Journal Research, "Looking Ahead" [box attached to "Debt Panel Fails to Reach Deal"]. www.wsj.com. Accessed November 21, 2011.
[4]Steve Kroft, "Congress: Trading Stock on Inside Information?" CBS "60 Minutes". Segment aired November 13, 2011. Web transcript: http://www.cbsnews.com/8301-18560_162-57323527/congress-trading-stock-on-inside-information. Accessed November 22, 2011.
Labels: Government Policies
posted by Carol S. | 11/22/2011 10:17:00 PM
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