Debt ceiling gridlock may lead to ‘Warrior Fix’
Congress could create an off-budget “Warrior Fix” to defuse deep Pentagon spending cuts if there’s a November deadlock in the 12-member Joint Committee of Congress created by the debt ceiling deal signed into law today.
The legislative “super committee” is charged with finding $1.5 trillion in cuts by November. (RELATED: Poll shows Americans think lawmakers acted like ‘spoiled babies’ in debt debate)
This process amounts to “rolling the dice,” said Mike Franc, the Heritage Foundation’s vice president for congressional outreach, because the debt ceiling law will trigger huge cuts in defense and Medicare spending over the next decade if the panel should gridlock.
Congress would likely prevent such cuts by creating a series of one-off Pentagon funding bills, Franc predicted. That “Warrior Fix,” he said, would be similar to the “doc fix,” the “AMT patch” and the “Bush extenders” that were created in response to previous congressional deadlocks, and are predictably renewed to avoid painful budget clashes.
The “doc fix,” for example, is a byproduct of the 1997 budget deal that cut predictions of future spending by lowering future payments to Medicare doctors and other professionals. The medical sector routinely lobbies Congress to raise these payments. President Obama signed the current “doc fix” into law in December 2010; it will last until January 2012. This periodic fix ensures that budget planners do not have to include the full ten-year, $200 billion, 10-year cost in long-term budget plans.
Similarly, Obama signed another “AMT patch” that curbs implementation of the Alternative Minimum Tax rule in January 2012. He also approved a two-year extension of the tax cuts championed by President George W. Bush in 2003.
White House officials, including Obama himself, are already calling for the 12-member committee to reduce the federal budget deficit with a combination of spending cuts and tax increases. “I’ve said from the beginning that the ultimate solution should be balanced … Big corporations and the wealthiest Americans shouldn’t be exempt from kicking in,” Obama said Monday in a video to supporters of his 2012 campaign.
But GOP legislators reject any promise of tax increases. “We’re not going to raise taxes on this committee,” said Rep. Paul Ryan, the chairman of the House budget committee. “We’re not going to put the kind of people on this committee that would go for a tax increase.”
“That’s not going to happen, otherwise the triggers will kick in,” Democratic Sen. Harry Reid, the Senate Majority Leader, said Tuesday. “There has to be equal spending cuts, there has to be revenue that matches that.”
Few politicians want to see the triggers pulled. Republicans don’t want to cut defense programs deeply. They are also wary of cutting Medicare programs in the run-up to the 2012 election.
Democrats, too, will be loath to cut Medicare programs, even if the cuts only affect programs that pay doctors and other health care providers. “Democrats are going to put people on the committee who will not erode entitlements,” predicted Republican Sen. Lindsey Graham.
Similarly, many Democrats want to avoid deep cuts in defense. Those cuts could amount to $650 billion over 10 years, and would come from the larger national security budget. Most of those funds are disbursed to the Pentagon, but the departments of Energy and State would also feel the pinch.
“The president has not called for, and would not support, these kinds of cuts in defense spending,” White House spokesman Jay Carney said Monday. “For that reason, we will not get there” via the 12-member panel, he said. “We will achieve significant deficit reduction in a more balanced way,” including through “revenues,” or taxes, Carney added.
President Obama has called for $400 billion in defense cuts during the next 12 years, and welcomed the new requirement to cut defense spending by roughly $350 billion over 10 years. But deeper cuts would also threaten his relatively high poll-ratings on military actions directed against jihadis, including the action that resulted in the death of Osama bin Laden.
The unwanted pain of those cuts does improve chances that the 12 appointed congressional negotiators would agree on a combination of cuts and a revenue-neutral tax reform package that would spur both growth and revenues, Franc suggested. “That’s probably going to be the way you turn lemons into lemonade,” he said.
But any such combination deal, he warned, could be killed by progressives who will likely oppose any cuts, and by a public that might react to the fear of imminent spending cuts’ impacts close to home.
If that happens, defense cuts would be automatically triggered, Franc added, and Congress will likely adopt a ‘Warrior Fix’ to offset the required cuts. “We’ll have a ‘Tax Fix’ on top of a ‘Warrior Fix’ on top of a ‘Doc Fix,’” he said.