As the Worm Turns: The Budget Deficit Supercommittee Staggers toward Failure

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November 20, 2011; Source: Politico PlaybookThe coverage in Politico has been rich with evocative lines—a Democratic aide saying that the “worm has turned,” a headline that the supercommittee statement will say “this marriage is over,” and, harkening back to Doug Flutie at Boston College, the suggestion that committee members might be searching for a “Hail Mary” pass to save the day. Did anyone really think that the supercommittee was going to succeed? Apparently the supercommittee hasn’t even met as a body since late October. It appears that several members wrote the supercommittee off long ago, and a couple barely even engaged in the discussions. Did you expect a committee representing two political parties headed into a presidential election and ideologically more polarized than ever to reach a consensus?

After the supercommittee’s co-chairs do their imitation of Demi Moore and Ashton Kutcher, what happens of consequence to the nonprofit sector? Here’s a bunch of predictions:

  1. The markets will react, as they have each time the nation’s two political parties have ground into political gridlock.
  2. Not scheduled to go into effect until 2013, the automatic spending cuts—called sequestration—will be a 2012 campaign issue. That means that the shifts in Congress toward Republicans or Democrats will be incredibly important for determining which direction the nation will ultimately follow for debt reduction and economic stimulus.
  3. After the supercommittee’s failure and the past year’s political posturing, the nation’s legislators may be incentivized to turn to the expert, relatively bipartisan analyses done by the Bowles-Simpson Commission and the Rivlin-Dominici Bipartisan Policy Center group.
  4. The automatic budget cutting that would result from the supercommittee’s deadlock might be a good thing in some ways, since the bulk of it is focused on military spending. It’s hard to imagine that the Pentagon’s budget couldn’t stand a significant haircut.
  5. On the other hand, Congress could convene to shift the sequestration from military to domestic spending. Congressional Republicans such as Senator John McCain who will undoubtedly lead a floor fight to protect the military budget. McCain will get support from those Democrats who have military contractors providing jobs in their districts.

Facing a November 23 deadline for a budget deal that has to be available for review forty-eight hours in advance, the budget supercommittee may be giving up the ghost, but the pressure for domestic spending cuts will continue. Nonprofit advocates concerned about the social programs needed by communities suffering through the nation’s continuing recession will have to be on guard even after the supercommittee formally disbands.—Rick Cohen