Debt

Supercommission Fail?

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It's a hard game!

Don't count on the debt-deal supercommittee's ability to pare back the deficit—or the backup reductions that are supposed to kick in if the committee fails to cast a sufficiently powerful deficit reduction spell. Via Bloomberg:

Congress may undermine the deal that raised the U.S. debt ceiling by failing to agree on a plan to curb the deficit and then softening the impact of automatic spending cuts that would kick in to achieve the budget targets.

That's the view of five former directors of the Congressional Budget Office. Lawmakers on a new committee charged with deciding on a budget plan will struggle to reach an accord, even as the Standard & Poor's decision to downgrade U.S. debt heightens pressure on the panel, some of the ex-CBO chiefs say. And while the backup mechanism for across-the-board cuts may be the best compromise for a divided Congress, it's a flawed device with a history of failure, they say.

…While the cuts are supposed to be automatic, Congress can delay or override them if they prove too painful—defense spending would be reduced by 9.1 percent over a decade while non-defense programs would be cut 7.9 percent. That's what lawmakers did with the 1985 Gramm-Rudman-Hollings Balanced Budget Act, the template for the trigger.

I noted the committee process's history of failure here. More on the failure of Gramm-Rudman-Hollings here

NEXT: Fiscal Hawks vs. Defense Hawks

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  1. Good morning reason.

  2. I demand Morning Links!!!

    1. We need an article on ‘Morning Links Fail’.

    2. Seriously. What up wit dat?

      1. the world is coming to an end (or not)… where else can we vent?

  3. AIG sues BoA for [MISREPRESENTING] the quality of its mortgage-backed securities, including more than $28 billion it bought, and [LYING] to credit rating agencies about the underlying loans.
    http://www.msnbc.msn.com/id/44….._business/
    _
    Looks like wingnut radio entertainers, like rushbeckhannity, were [MISREPRESENTING] & [LYING] saying the CRA was responsible for countrywide mortgage [MISREPRESENTING] & [LYING] its own products to its own investors.

    AIG said it examined 262,322 mortgages that backed 349 offerings it bought between 2005 and 2007, and found the quality of 40.2 percent of the mortgages was significantly inferior to what had been represented.

    “Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, who had no alternative but to rely on the lies and omissions made,” said the complaint, filed in the New York State Supreme Court in Manhattan.

    1. How ya doin’?

    2. funny how wingnut radio entertainers are poor comedy

      1. Huh? Michael Savage is comedy gold.

    3. Bank sues bank because plaintiff is pissed it didn’t think of it before defendent.

      Fail. Move on.

      1. BoA is in a hurry to get its legal issues behind them (many of which came with the Countrywide purchase) and is willing to spend a lot of money doing so. AIG is taking advantage of that.

  4. So, I wonder what debt reduction plan could not be overidden by Congress? Hmm, would that be a balanced budget amendment? I think it might! What a crazy idea. Much better to continue with these charades of super committees and debt reduction laws that will be tossed into the garbage before they are ever implemented.

    1. A BBA relies on Congress respecting it and the courts upholding it.

      1. This.

        I’m not sure who would have standing to sue if the Congress failed to produce a balanced budget.

  5. Don’t count on the debt-deal supercommittee’s ability to pare back the deficit…

    I’ll go ahead and file this statement under “Shit, No.”

  6. The whole supercommittee is based on the premise that Congress will suddenly find the balls to do in six months what it lacked the balls to do a week ago.

    Failure is not only an option, its an inevitability. The greatest minds in the country for evasion, deceit, and outright theft are now applying themselves to the problem of how they wiggle out of this one.

  7. Let me be clear, I’ll get around to disclosing a debt reduction plan in a few weeks, right after I take a few more much-needed vacations.

    1. Do’nt forget to pivot the focus to jobs again. It’s a merry go round!

  8. Isn’t this one of those points that is painfully obvious? Is there anyone who honestly expects any real results from the debt commission?

    If they actually come up with real cuts, congress won’t allow them to proceed, and if they try to propose something that will pass, it will be nearly worthless.

    Congress is blind, and dedicated to maintaining their power at all cost, including crashing the economy.

    1. Is there anyone who honestly expects any real results from the debt commission?

      I do! I do!

  9. Correct me if I am wrong, but didn’t Obama appoint a blue-ribbon, bipartisan deficit commission last year? Didn’t that commission release a report with a plan calling for a “balanced approach” for deficit reduction? And didn’t Obama completely ignore it??

    If what we need is bipartisan consensus and a balance approach, why isn’t that plan at least on the table for discussion?

    Finally, whenever one of Obama’s mouthpieces (both in and out of government) blames the Tea Party and “GOP brinksmanship” for the downgrading of US debt, why isn’t Obama’s rejection of his own deficit commission report immediately thrown back in the mouthpiece’s mouth?

    1. I believe Obama’s excuse was that only the GOP Senators, not the House members, signed onto that deal. It only got a majority of the commission, not a super-majority.

      But yes, that’s entirely correct.

      For some reason, credulous commentators took Obama’s “grand bargain” rhetoric with no plan more seriously than, say, Republicans calling for a balanced budget while not presenting plans that actually get us there.

  10. Government failure? Nah, that could NEVER happen!

  11. Stop worrying, folks, I can assure you that I have a plan to fix the deficit and put us back on a path to sustainable economic growth. It’s all written out on the back of my scorecard… now where did I put that thing?

  12. Congress may undermine the deal

    What are the odds of THAT happening?

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