Bang or Whimper: Super Committee Predictions
With just days to go before their November 23rd deadline, the $1.2 trillion question in Washington is whither the Super Committee? Will they go out with a bang? A whimper? Or something in between?
These tea leaves are awfully tough to read. That being said, we’ve long believed that the Super Committee will get to something in between. By that we mean we think it likely they will reach partway to their deficit reduction goal of $1.2 trillion and “kick the can” down the road on the rest. That can will probably land at the doorstep of the tax and entitlement writing Committees which will be tasked with making up the difference. At the end of the day, whatever target the Super Committee fails to meet will likely be the premier political tussle of next year in Congress. And if Congress doesn’t resolve it next year, many, perhaps a majority in Congress, will be looking for ways to avoid the automatic cuts – particularly those in defense – that will be due to take effect on January 1, 2013.
Tax increases and reforms of entitlement programs like Social Security and Medicare have long been the sticking point in the Super Committee deliberations. Again, at the end of the day, we think that in addition to getting at least partway to their deficit reduction goal, the Super Committee will instruct the Ways and Means and Finance Committees to undertake tax and entitlement reform. That is a tricky proposition, particularly in an election year. As always, we will keep you posted as the process unfurls.