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Everybody knows that screwing up a critical assignment at work will almost surely get you fired.
That is, unless you work as a member of the U.S. Congress.
After more than two months of bickering, the six Republicans and six Democrats on the "super committee" tasked with finding at least $1.2 trillion debt reduction savings over the next decade have thrown in the towel.
They have no debt reduction plan.
Analysts agree that despite the urgency of addressing America's fiscal issues, both sides are more interested in scoring political points than solving problems.
Meanwhile, the federal debt continues to grow. It eclipsed $15 trillion last week.
With representatives pocketing salaries of $174,000 a year despite their failures, it's no wonder U.S. citizens are down on Congress. A recent New York Times/CBS poll showed Congressional approval sinking to just 9%.
Even some members of Congress admit it.
"The politicians care more about their parties and getting reelected than they do the very real problem," Sen. Tom Coburn, R-OK, said Sunday on C-SPAN's "Newsmakers" program. "[The super committee] was Washington's answer to kicking the can down the road."
According to the law passed as part of the debt ceiling deal over the summer, failure of the super committee to come up with a debt reduction plan is supposed to result in $1.2 trillion in automatic cuts, known as "sequestration."
Half of those cuts, $600 billion, are to come from defense spending, with the other half coming from such areas as education, the environment, transportation, housing assistance and veterans' healthcare.
But just because that's what the law says doesn't mean it will happen. Congress, don't forget, can undo any laws it creates. Ideological opposites Sen. John McCain, R-AZ, and Rep. Maxine Waters, D-CA, among others, are already working on this.
It's just more evidence of a disingenuous Congress.
Pointing Fingers
Instead of developing a deficit reduction solution, lawmakers have tried to convince the American people that the super committee's failure is the other party's fault.
Democrats had called for a "balanced" approach of some higher taxes, mostly on the wealthy, and spending cuts. Republicans eschewed any increase in taxes, preferring instead to reach debt reduction goals entirely through spending cuts.
"The wealthiest of Americans, those who earn more than $1 million every year, have to share, too. And that line in the sand, we haven't seen any Republicans willing to cross yet," super committee co-chair Sen. Patty Murray, D-WA, said on CNN's"State of the Union."
"I don't understand the economics that says that if we raise taxes on my employer, or my boss, somehow they're going to go out and hire my unemployed brother-in-law," Rep. Jeb Hensarling, R-TX, another committee co-chair, countered on "Fox News Sunday."
Why so much rhetoric and no action?
The main reason is that the automatic cuts don't kick in until January 2013 – after the key 2012 elections. Both sides hope to pin the blame on the other side to secure election victories next November that will empower them to solve the debt problem their way.
Subtraction by Inaction
One bizarre irony of the Washington gridlock is that a truly do-nothing Congress could result in debt reduction far beyond the original $1.2 trillion goal. If Congress fails to extend the Bush-era tax cuts, which expire at the end of 2012, the government could triple its savings.
According to Jim Horney, vice president for Federal Fiscal Policy at the Center on Budget and Policy Priorities, the expiration of the Bush tax cuts combined with the sequestration savings of $1.2 trillion would add up to a whopping $7.1 trillion in deficit reduction over the next decade.
However, while the expiration of the Bush tax cuts would be good for the federal budget – Horney estimates the United States would have a nearly balanced budget by 2021 – it would take a lot of money out of citizens' pockets.
Investors would get hit particularly hard, since they'd not only be paying higher income taxes but also higher tax rates on capital gains and dividends. Capital gains rates would rise from 15% to 20%; dividends would be lumped in with your income and taxed at that rate, rather than the 15% it is now.
American wallets could get hit even sooner if Congress fails to renew the payroll tax cuts and extended unemployment benefits for next year. That will mean less money in everyone's paycheck starting in January.
Of course, that's a lot easier to take when you're a millionaire pulling down $174,000 a year.
Perhaps most galling of all is that our overpaid lawmakers know they're failing.
"I'm ashamed. I have to go back and apologize for what we're doing," Sen. Joe Manchin, D-WV, said on the CBS program "Face the Nation" on Sunday.
News and Related Story Links:
- Money Morning:
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- Money Morning:
A Toothless Debt Deal Won't Stop a U.S. Credit-Rating Downgrade – Or the Aftermath that Follows - Money Morning:
President Obama Tackles Deficit Reduction and Debt Ceiling as Budget Battle Continues - The Washington Post:
Why doing nothing yields $7.1 trillion in deficit cuts - Yahoo! Finance:
The Not-So-Super Committee Fails, As Expected - Politico:
Even Congress hates Congress - Bloomberg News:
Supercommittee Likely to Announce No Deal on Deficit Cuts
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.
As a non US resident nor citizen, I dont really have any say on this subject. However I must confess being apalled by the recklessness of the US political system. It may not be much better elsewhere, but I am afraid the US stands out as a very bad example. No suprise that your "political" model appears to be unwelcome abroad.
There is an easy fix. The twelve congressmen could not do the work?
Fire them and bring on twelve more. Then see how efficient they will be.
If they fire them all the next six Republican would balk because they have all
pledged to not raise taxes to this lobbest.
Go long tar and chicken feathers.
I am a light blue socialist from Norway living in Mexico. I am following you gays in US and don´t understand the argument from the read rep.side( wrong color RED in the world is left not right) that tax on the welt´- yest will create jobs. They got lover tax under Busch, so way diden´t the job market grow??? Any government have to give a safety net for their people…46 mill on food stamps and 9 to 20% out of work. You export the jobs to china, India, Mexico and any plays wher you cud win a dollar the last… Read more »
"the expiration of the Bush tax cuts combined with the sequestration savings of $1.2 trillion would add up to a whopping $7.1 trillion in deficit reduction over the next decade" …honestly, and you believe this? Without spending cuts all so-called savings and revenue enhancement will be consumed. While I understand this will benefit your readers, it will do so at the expense of those who have no direct access to brokerage accounts trading in complex strategies. The end result will be more debt and deficits and economic distortion – great for the distortor but not for the distortee. As I… Read more »
Defense spending should be cut if we get out of Iraq and Afghanistan. Also, we don't need our military in 130 different countries as Ron Paul says. Even though there would be far fewer military jobs available, the military defense and homeland security budget should be cut. Any cuts in the federal government mean fewer jobs available.
It's always so easy to blame the elected representatives, but I'm afraid we get the government we deserve. We reward liars that tell us "I will cut taxes, increase spending on your favorite things and eliminate the deficit" and we fire the guys that say "look, we're in bad shape, we have to increase your taxes and cut services to pay off all these debts". What do you think they're going to tell us? We voted for all these guys and, guess what? most of them will get re-elected by telling the same lies again to the same short-sighted and… Read more »