The Super Committee Blues

Debt Reduction Super Committee

On Fox News Sunday Chris Wallace interviewed two representative members of the super committee charged to come up with at least $1.2 trillion in spending cuts to attack this nation’s massive debt problem.

That committee now has just 9 days left to come to agreement. If they don’t then automatic spending cuts kick in, including $600 billion in defense spending cuts.

One committee member interviewed was Democratic Congressman James Clyburn and the other was Republican Senator Pat Toomey.

Though both expressed cautious optimism they will come to an agreement, one important detail came out during individual interviews that doesn’t support their confidence.

They can’t agree on what a spending cut is nor on what a tax increase is!

But can they still miraculously come to an agreement that can pass Congress?

No! Here is why…

Democrats and Republicans are still comparing apples to oranges… even at this late stage. Congress will not cut anything in an election year.

Click for larger View!

Latest Democratic Plan

Latest Republican Plan

War Spending

Notice how the Democrat’s plan lists $1.1 trillion more in cuts than the Republican plan? Sounds like they are out Republicaning Republicans, doesn’t it? They aren’t.

For example, Congressman Clyburn insists on counting $917 billion to end the Iraq and Afghanistan wars as a spending cut. That was what Harry Reid tried to pass off as deficit reduction last summer in his debt reduction proposal. It didn’t fly then and it won’t fly now.

Heck, we only spent $1.1 trillion on both wars in their first 10 years when they were hot, full fledged wars. We will be totally out of Iraq the end of this year and Afghanistan is drawing down right now.

Chris Wallace pointed out to Congressman Clyburn the absurdity that he was talking about $917 billion that was never going to be spent in the first place. Clyburn insisted that it was “realistic” and rattled off a number of ways the savings could be spent.

That is where the bulk of the Democrat’s spending cuts come from. It is a reworked portion of Harry Reid’s debt reduction plan from last summer.

Like in Reid’s plan, the last $300 billion in deficit reductions in the Democrat’s proposal come mostly from interest savings on the $917 billion in war spending that was never going to be spent anyway!

In other words, most of the Democrat’s $1.3 trillion in savings are totally fictitious. The $1 trillion in revenue increases, however, are very real!

Tax Increases and Loopholes

Senator Clyburn also insisted that ending a tax loophole is not a tax increase and can’t be counted as such.

Democrats agree with Clyburn, but Republicans don’t.

Here is why… Republicans believe that ANY change to the tax code that results in someone paying MORE in federal taxes than they did before, regardless of source, is a tax increase.

If ordinary folks like us have to pay MORE in federal taxes this year than last year then we’d call that a tax increase. To conservatives it does not matter whether the increase came from closing a loophole or from increasing the base income tax rate, the net result is exactly the same.

In both cases the government is still taking more of taxpayer’s money from them! To Republicans it makes logical sense to call an increase an increase.

However, liberal Democrats don’t call closing loopholes a tax increase. That may be because most Democrats believe that closing a loophole only affects corporate fat cats and doesn’t affect them personally. They are wrong!

Every business loophole closed will result in an increase in the price to everyone, including low and middle income Democrats, for whatever product or service is provided by that business.

Corporations pass that cost of doing business on to their customers just like they do the cost of raw materials. That is just basic economics.

Clyburn correctly said it is wrong to allow corporations enough loopholes such that they pay no taxes at all. Everyone should have to pay something. He is right about that.

Of this you be certain, no matter what, the top 1% will not be hurt by closing loopholes nearly as much as the middle class because of the increased costs for goods and services.

Conclusions

The bottom line is that if Republicans and Democrats can’t even agree on the definition of a spending cut or a tax increase then they have little chance to come up with $1.2 trillion in agreeable, legitimate spending cuts.

Prerequisite to a solution is agreement on the fundamental definitions.

Despite that the super committee may yet come up with one of Congress’ famous rickety 11th hour compromises.

But even if they do there is no way the full Congress will pass any bill that upsets any constituency group during an election year. Spending cuts upset people!

There is now more talk about altering the original automatic cuts than coming to an agreement.

To his credit President Obama vows to veto any changes to the automatic spending cuts. But then that is probably because he wants to avoid another government shutdown threat before the 2012 elections.

In the meantime the national debt continues to grow at over $4 billion a day and will likely cross the magic $15 trillion barrier before the super committee’s deadline.

That will give all of us the super committee blues.

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About azleader

Learning to see life more clearly... one image at a time!

Posted on Nov 14, 2011, in Debt, Deficit, economics, Economy, Politics, Super Committee, Taxes. Bookmark the permalink. 2 Comments.

  1. Spot on, AZ. I say the Republicans should give the Democrats and Obama what their asking for and see how they like it.

  2. If you mean give them all their spending cuts within the Republican plan then I agree. 😉 😉

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