Recent reports suggest that the Joint Congressional Committee on Deficit Reduction — the so-called super committee — is on a crash course with failure.
While conventional wisdom in Washington, D.C. counsels fear of the $1.2 trillion dollar reductions in federal spending that would be automatically triggered by failure, Mercatus Institute senior research fellow Veronique de Rugy believes this is actually the best-case scenario.
“The sequester,” she told The Daily Caller, referring to the spending trigger, “is the best thing that could happen.”
As de Rugy explains in a recent report, that sequester isn’t technically a real spending cut.
“Instead of simply passing appropriated funds to the agencies,” de Rugy writes, “the U.S. Treasury ‘sequesters’ the difference between the cap set in the BCA [Budget Control Act] and the amount appropriated.”
In other words, the much-discussed $1.2 trillion in cuts are not really cuts at all, but reductions in the projected spending — and in the projected deficits — over the next 10 years.
According to current projections, spending is set to increase by $1.7 trillion over the next 10 years. If the sequester actually happens, de Rugy writes, that figure will decrease by approximately $100 billion — still resulting in a $1.6 trillion increase in spending during the same period.
De Rugy believes the current super committee debate indicates that both sides are more interested in political consequences than in solving the thorny problem of government overspending.
“The debate over revenues is a distraction,” she told the DC. “They’re just forgetting the one thing that will change our financial path is to cut spending, and reform entitlement spending.”
“Everything has to be on the table.”
The sequester was designed specifically to force Republicans to negotiate with Democrats. Roughly half of its reductions would fall on the defense budget; entitlements, with the exception of a Medicare cut capped at 2 percent, would remain untouched.
But even if a stalemate should trigger the sequester, defense spending would still increase by 18 percent over the ten year time-frame.
Ed Lorzenzen, a senior adviser at the non-partisan Committee For a Responsible Budget, echoed De Rugy’s argument in a conversation with the Daily Caller.
Lorzenzen chided both Republicans and Democrats for posing as good-faith negotiators while ensuring that their own pet programs escape unscathed.
“Talk about making government smaller in the abstract is easy,” Lorzenzo said, “but translating that into specific choices about what the government is going to cut becomes much more difficult.”
Like De Rugy, Lorenzen believes a sequester would be better than a plan relying on “accounting gimmicks,” a reference to plans recently floated by committee members that would rely in part on savings from the draw-downs in Iraq and Afghanistan — funds, in other words, already scheduled to be saved.
But even with the sequester, Lorzenzen and De Rugy worry about the signals being sent to the markets, and to an American public already disenchanted with the Congress, by automatic budget cuts caused by legislative inaction.
“When are we going to get a Congress with a backbone, that’s willing to do what’s right for America?” De Rugy asked.
“We’re obviously not there yet.”