When Congress created the deficit supercommittee they attached a trigger to it that would automatically enact large cuts in defense spending if they failed to vote out a proposal. The idea was that nobody in Congress wants to make major cuts to defense so the threat would compel the supercommittee to accomplish the kind of deficit-reduction compromise that the full House and Senate were unable to achieve. More than halfway through the supercommittee's tenure, however, the only progress being made involves finding a way out of the trigger.Read Full Article
On January 1, 2013, a perfect storm of major federal policy shifts are set to occur. The Bush tax rates are scheduled to expire, raising taxes on all income earners. The debt-ceiling trigger -- assuming the supercommittee gridlocks -- would go into effect, causing massive cuts to government across the board. And a host of other tax credits important to businesses and the middle class are scheduled to expire as well. It's no coincidence that all of this is happening right after the 2012 elections. It's designed, on some level, to facilitate a grand bargain to extend the status quo that can be passed by an unaccountable lame-duck Congress (and possibly President), with the maximum amount of time before voters will get another chance to weigh in.
Ryan Grim has a fantastic piece outlining how things may go down:Read Full Article
As has been the fate of every other bipartisan congressional sub-group that has met recently to talk about cutting deficits, the most likely outcome for the supercommittee is gridlock. The supercommittee is split evenly between the parties, and the members that have been chosen are probably too partisan to achieve a grand bargain on taxes and spending that can win a majority vote. If gridlock occurs, an automatic spending cut trigger that Congress created in the debt ceiling bill will go into effect. Let's take a look at how that would work.Read Full Article