The Super Committee

The Joint Select Committee on Deficit Reduction or as it is known in popular parlance, “The Super Committee,” has a deadline to meet. As November 23 approaches, 12 Congresspersons must make a decision on debt reduction in order to bring under control the lavish spending of the last three years that is threatening our national security.

Hillary Clinton, our Secretary of State, said, “I think our rising debt levels pose a national security threat, and it poses a national security threat in two ways: It undermines our capacity to act in our own interest, and it does constrain us where constraint may be desirable. And it also sends a message of weakness internationally.” Yet she did not stop giving away our taxpayer dollars to our foes all over the world. Admiral Mullen said it more succinctly, “The most significant threat to our national security is our debt.” “The Super Committee is this Constitutional abomination that arose out of the debt ceiling negotiations. It is 12 handpicked representatives of the Senate and House leadership that meet behind closed doors short-circuit everything that is involved in our legislative process, in the parliamentary institutions that have evolved over centuries to distill a common direction from many diverse viewpoints.

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Their mission is to come up with that decision while side-lining 523 elected representatives of the people of the United States and dump their decisions in the laps of those representatives, for a take it or leave it, up or down vote that cannot even be amended. Bad process makes bad policy and this is the worst process that I have ever seen. Obviously, we will see the repercussions of it when the committee is required to submit its recommendations before Thanksgiving. As you know, the debt limit deal included a so-called sequestration, which initiates automatic spending reductions over a period of ten years if they cannot come to a conclusion. Frankly, I am looking at that as Plan A. (Rep. Tom Mc Clintock, R-Ca) The twelve members of the “Super Committee” are:

• Rep. Jeb Hensarling (R-Texas), Co-chair
• Sen. Patty Murray (D-Washington), Co-chair
• Sen. Max Baucus (D-Montana)
• Rep. Xavier Becerra (D-Ca)
• Rep. Dave Camp (R-Michigan)
• Rep. Jim Clyburn (D-S.C.)
• Sen. John Kerry (D-Mass.)
• Sen. John Kyl (R-Arizona)
• Sen. Rob Portman (R-Ohio)
• Sen. Pat Toomey (R-Pa)
• Rep. Fred Upton (R-Michigan)
• Rep. Chris Van Hollen (D-Md)

Sequestration is “the cancellation of budgetary resources for the purpose of enforcing statutory budget limits and pay-as-you-go (PAYGO) requirements. This process is triggered automatically when these statutory limits of PAYGO have been violated as a result of legislative actions.” The Balanced Budget and Emergency Deficit Control Act, commonly known as the Gramm-Rudman-Hollings Act, first established the sequestration process in 1985. The Budget Control Act of 2011 highlights the following defense budget:

• FY 2011 $530 billion
• FY 2012 President’s request $553 billion
• CBO baseline for FY 2013 $549 billion
• President’s projection for FY 2013 $571 billion

The automatic trigger would return based defense budget to FY 2007 levels (adjusted for inflation) and would hold at that level for eight years. The Budget Control Act of 2011 was divided into two parts:

1. Caps on non-war related discretionary spending for FY 2012 to FY 2021; these caps are further divided into security spending and non-security spending for FY 2012-2013; for FY 2012-2021, a single cap is provided for all discretionary spending (Defense, Homeland Security, Veteran Affairs, National Nuclear Security Administration, the intelligence community, and international affairs)
2. Automatic trigger to force cuts if Congress fails to act on the recommendations of the Joint Committee or the Joint Committee’s recommendations result in less than $1.2 trillion in deficit reduction

The Joint Committee must approve by a simple majority its deficit reduction plan by November 23, 2011. By December 23, Congress must hold an up or down vote on the Joint Committee bill with a simple majority required for approval. If a bill with deficit reduction of at least $1.2 trillion is not approved by both chambers and signed into law by the President by January 15, 2012, the trigger provision automatically takes effect and the defense budget will be $472 billion. According to the Center for Strategic and Budgetary Assessments, the patterns of the 112th Congress has been of “management by crisis,” beginning with the near government shutdown in April 2011 and the narrowly avoided government default on August 2, 2011. (Todd Harrison) According to the Washington Post headline, “tax issue handcuffs Super Committee.” The twelve lawmakers are yet to agree on a basic framework.

• Republicans refuse to raise taxes
• Republicans rejected the President’s deal to cut federal health and retirement programs in exchange for $1 trillion in new revenue over the next decade
• Automatic reductions would fall heavily on the Pentagon
• Democrats refuse to commit to specific entitlement cuts
• Republicans suggest that tax collections should rise solely through economic growth
• Super Committee suggested to cut entitlement spending and close several tax loopholes
• Super Committee suggested that tax-writing committees should overhaul the tax code to lower rates and raise sufficient additional revenue to meet the $1.2 trillion target
• Others urged the Super Committee to count the savings of approximately $1.1 trillion over the next decade from the drawdown in Iraq and Afghanistan towards the $1.2 trillion reduction in the deficit reduction bill; House Majority Leader Eric Cantor (R-Va) criticized such war savings as “gimmicks and accounting tricks.”

Sen. John McCain (R-Ariz.), in his infinite wisdom, promised to defuse the trigger through legislation if the Super Committee does not come to an agreement. Unlike S&P, which downgraded our country’s credit worthiness status, Moody has decided to uphold the AAA rating in August because “more than $2 trillion in deficit reduction was at least planned.” The Department of Defense was advised to make contingency plans for sharp cuts as required by the trigger in FY 2013. The Romans had a very wise motto, “Si vis pacem, para bellum,” “If you want peace, prepare for war.” As we lower our ability to defend ourselves against enemy threats, consider what uncontrolled national debt has lead to in other countries:

• Bankruptcy
• Lack of capital formation
• Retarded economic growth
• Monetizing deficits (overprinting of money in excess of goods and services produced in the economy thus causing inflation; the Federal Reserve System Chairman Bernanke calls this overprinting of money euphemistically “quantitative easing,” or QE)
• Social turmoil, famine, revolutions

Not paying our national debt is not an option. When Venezuelan dictator Cipriano Castro who borrowed lots of money in early 20th century and refused to pay it back when payment was demanded, in December 1902 warships from Italy, Britain, and Germany shelled Venezuelan forts and blockaded the country’s ports until Caracas paid up. If our government borrows more money, more pressure would force us to cut defense spending and it would be painfully evident proof that we are a fading superpower.