CBO director Douglas Elmendorf addressing the Supercommittee,

"There's this thing called logic, see..."

Image: J. Scott Applewhite, Associated Press 

Listening to CBO director Douglas Elmendorf tell the so-called Supercommittee about the realities of budget repair in grown-up land this month was like hearing about a ship wreck months before it happened. The CBO director is one of those rare policy nerds who uses unvarnished logic to address budget issues.  His recommendations are thoroughly nonpartisan and yet Republican members of the panel don’t see them that way because they already sawed off half the table and removed it from the room.  That’s the gist of it.  Revenue—and logic—are not only off the table; that half of the table isn’t even in the room.

            “One needs to either carve away at the functions of government or one needs to raise revenue,” said Elmendorf.  And every time the Supercommittee takes options off the table, they reduce the available options from which to cut or raise revenue, he reminded the bored-looking lawmakers. Only a week before Elmendorf addressed the 12-member body, Republican Senator John Kyl threatened to quit the group if it even so much as looked at defense cuts.

            Urgency is part of Elmendorf’s pitch, though it seemed to fall on deaf ears.  “The federal budget is quickly heading into territory that is unfamiliar to the United States,” he said on September 13.  So what are we heading for here, a Greek vacation?  The answer is, theoretically at least, possibly. Everyone counts on the Supercommittee to avoid disaster in the end, but I’m not so sure—depending on how you define disaster.

            If the group’s deliberations fail, automatic so-called sequestration cuts sacred cows like defense and Medicare alike.  That might actually bring some attention to analyses like Elmendorf’s.  Essentially, he agrees with the Obama Administration that we should not cut deeply now.  He warned that abrupt spending cuts could harm the already near-flatlining economy.  In fairness, he also warned against dramatic tax increases.  But then, no one has suggested dramatic tax increases.  Independent analysts across the spectrum have noted that allowing the Bush-era tax cuts on the wealthiest Americans to expire would only plug a tiny bit of the deficit we face, so you can hardly characterized those as dramatic, except to those who begin their sentences with the words “Job creators.”

            Elmendorf’s point is that, by the numbers, there is no business as usual in our future.  He said that the U.S. “must deviate from the policies of the last 40 years.”  So what would such a new normal look like if done well?

Hello?  Share the Pain is the Only Way, Guys

            As things stand today, sequestration seems nearly inevitable as an interim outcome on the way to finding a new balance that represents broad cuts and broad revenue measures.  Sensible people get this, but that excludes by definition all active politicians.  On the subject of taxes, Warren Buffett had a point.  But really, a huge number of Americans with family incomes above $150,000 have not lost their jobs, are still buying cars, cruises and caviar, and could stand to part with some little bit of the Bush windfall they never deserved in the first place. I seem to remember a real taste for war that developed concurrently to the giant tax giveaway engineered by the neocons.  That legacy of Dick Cheney—permanent, unfunded war—what about that?  Perhaps we should let taxes rise just enough to cover that little portion of legacy debt so our great-grandchildren won’t have to pay for Cheney’s Freedom Folly, just as a start.

            On the other hand, let’s allow the Social Security retirement age to increase by six months.  And allow Medicare co-pays to rise beyond the ridiculously low levels at which they are currently pegged. (As low as five bucks!)  And mitigate cost-of-living increases for Social Security by a tad by excluding volatile categories such as food and gas from the Social Security CPI.  And let’s cut farm subsidies.  And ethanol scams.  And defense contractor expenditures.  And corporate tax loopholes.  Let’s introduce a corporate Alternative Minimum Tax on any company that pays its CEO more than it does Uncle Sam—hello Ameriprise and 300 additional companies.

            The point is that everyone must share the pain in reasonable measure.  That, I think, is a core value behind the sobering message offered up by Elmendorf—there are no Cinderella Fixes.  What is so un-American about that?  Clearly, we need to hit the wall, perhaps repeatedly, before any reasonable solutions will stand a chance of being passed over the objections of radical conservatives.  Probably an election will have to intervene, and maybe a return to official recession, (as opposed to the stealth recession we presently endure).

            Perhaps we have to lose the White House to Mitt, stalemate the Senate, let the House of Representative party into oblivion for four more years—make that the 2014 mid-terms—until voter’s wake up and strike back against those who would dismantle Social Security and unravel the social safety net strand by strand.  Sometimes you don’t know what you’ve got ‘til it's gone.

            When Republicans like Rick Perry say to current Social Security recipients, we won’t touch a hair on your chinny, chin chin, I think, “Why not?  The social contract with everyone else would be gutted if certain parties had their way.

     That’s why the Supercommittee is so likely to fail.  It’s in the DNA of 50 percent of the membership.  And as to the things that the Democrats must give on, namely entitlements, I say don’t pre-compromise (word of the year!) on a single thing.  Get half of that table reassembled and put a big sign on it that says, “Revenue.”  I don’t think it has to only say “Taxes” because closing loopholes is not the same as raising taxes.  But, at minimum, it has to say “Revenue.”  And if revenue is not on the table then I am all for impasse, sequestration, electoral chaos, and perhaps, if things get bad enough, an eventual awakening to the fact that something has to give.