As the clock ticks toward next Wednesday’s deadline for the “super committee” on deficit reduction to come up with $1.2 trillion in savings, it’s looking increasingly likely that the panel will fail. Though that’s theoretically supposed to trigger automatic cuts in defense and Medicare spending, those won’t kick in until 2013. In other words, lobbyists for defense manufacturers, hospitals, drug companies, etc. will have a year to fight any cuts. Just to give you a sense of how pathetic a “super committee” failure would be, I created this chart, which shows how small the $1.2 trillion in cuts members are having so much trouble finding would be relative to the $44 trillion the federal government is projected to spend over the next decade, according to the Congressional Budget Office.
But the failure of the “super committee” raises a broader question, particularly if the triggered cuts get overridden: is it actually possible for Congress to cut spending? The problem Congress always runs into is that immediate spending cuts are seen as too disruptive, so even when members propose to reduce spending, they typically push for phasing in any cuts over time. Yet by doing that, they’re putting the actual task of implementing cuts in the hands of future Congresses. And history has shown that such cuts are often undone when it comes time to make them.
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In 1996, for instance, the new Republican congress voted to phase out farm subsidies over seven years, but by the end of that period, was doling out more subsidies than ever before. In 1997, the GOP voted to control the rate of growth of physician payments under Medicare, but the American Medical Association raises hell every time it comes to make those cuts, and sure enough Congress has voted consistently to prevent them from ever going into place.
Follow the spending debate now, and even the proposals that are considered the most ambitious – the ones that cap or freeze spending, that contain a stringent Balanced Budget Amendment, and so on – all rest on the assumption that the current Congress will be able to dictate the behavior of future Congresses.
And look at the biggest fiscal problem America faces – getting its entitlements under control. Even if somehow a Republican president signed something along the lines of Rep. Paul Ryan’s plan to reform Medicare, it’s unclear whether it would be implemented. Like most entitlement reform proposals, Ryan starts with the premise that it isn’t fair to make any changes to the program for those at or near retirement who have built their lives around the current system. But then you end up with a plan that doesn’t go fully into effect for a decade. That means Democrats would have 10 years to regain control of government and rescind the changes, or at least drastically alter them. Ryan’s plan involves transitioning Medicare into a system in which the government provides subsidies to seniors to purchase health insurance, but a big part of the debate is how quickly those subsidies grow. If a future Congress were to set the subsidies to grow at a faster rate, it would blow a hole in the budget projections.
All of this, of course, is very dispiriting. We all know the danger presented by the nation’s growing debt crisis. But the hard truth is that it may take a Greece-like collapse for the nation to cut spending, but by that point it’ll have to be done in a state of emergency, and likely accompanied by drastic tax hikes.
