Crunch time is rapidly approaching for the congressional super-committee, with less than a week to go before the November 23rd deadline. Failure to reach a deal by then will trigger automatic spending cuts of $1.2 trillion over the course of a decade beginning in 2013. Those cuts will be evenly divided between military and non-military spending, and therein lies the rub: Defense Secretary Leon Panetta has warned Congress that such automatic cuts could cripple the American military. That potential was best expressed in an exchange between Panetta and Senator Lindsey Graham (R-SC) on September 22nd. Graham asked, “If we pull that [automatic] trigger, would we be shooting ourselves in the foot?” Panetta answered, “We’d be shooting ourselves in the head.”
Whether such a dire assessment forces the panel to reach a deal remains to be seen. Both parties are constrained by ideological boundaries, the abandonment of which is viewed as extremely problematic, if not politically suicidal by their respective constituencies. For Democrats, any attempts to trim social spending, despite the reality that cuts to programs such as Social Security, Medicaid, food stamps, and veterans’ benefits remain off limits, would raise the ire of Americans long used to entitlements which many now view as necessities. For Republicans, raising taxes would be seen by their constituents as an economically illiterate move in a down economy, as well as an abandonment of principle. It may also be seen as breaking an implicit promise signified by the majority of the electorate handing fiscal conservatives a significant increase in power in the 2010 election.
Such is the stuff of which impasses are made.
Given all that is at stake in the negotiations, there does appear to be some movement. On Tuesday, Republicans presented their fellow party members a deal which would raise over $250 billion in new tax revenue over a ten year period. The number would be reached mostly by limiting certain itemized deductions for upper-income households, with “upper income” as yet undefined. In return, they want Democrats to begin revamping the tax code, part of which would entail freezing income tax brackets a their current level. Such a freeze would maintain the Bush tax cuts set to expire in 2012.
Some House Republicans are reportedly on board as a result of a closed-door meeting led by Jeb Hensarling (R-TX), who explained that refusing to accept such a deal would be a Pyrrhic victory, in that the scheduled elimination of the Bush tax cuts would amount to a $4 trillion tax hike.
The biggest stumbling block for the GOP? “I really think in this environment it would be very, very hard to find much support on the Republican side, particularly with the freshmen, to raise any taxes,” said freshman Rep. Chuck Fleischmann (R-TN). “It’s going to be very hard for members to run away from the pledge.” The pledge to which Mr. Fleischmann is referring is the “Taxpayer Protection Pledge” initially endorsed by Ronald Reagan in 1986, which binds signers to oppose “any and all tax increases.”
The pledge is the brainchild of anti-tax crusader Grover Norquist, president of Americans for Tax Reform (ATR). ATR currently has signatures from 238 House representatives, 41 senators, 13 governors, and all of the GOP presidential candidates except former Utah Governor Jon Huntsman. A few Democrats have also signed on. Yet as the deadline for a deal approaches, some Republicans are starting to view the pledge as an unnecessarily rigid constraint best expressed by Sen. John Thune (R-SD). “We shouldn’t be bound by something that could be interpreted different ways if what we’re trying to accomplish is broad-based tax reform,” he told MSNBC last month.
And since there are very few coincidences in politics, it should be noted that Thune made his remarks a day after Rep. Frank Wolf (R-VA) publicly berated Norquist on the House floor. “Have we really reached a point where one person’s demand for ideological purity is paralyzing Congress to the point that even a discussion of tax reform is viewed as breaking a no-tax pledge?” Wolf asked.
Yet even if the Republicans come to terms with a $250 billion tax increase by whatever manner they wish to achieve it, Democrats are likely to balk. Last week, after rejecting a Republican proposal, they countered with $1 trillion in savings matched by $1 trillion in tax increases. The cuts would have included $400 billion from Medicare and Medicaid, another $400 billion equally divided between defense and non-defense spending, and an additional $200 billion from unspecified provisions under discussion by the Super Committee. Tax reform was not part of the equation.
As of yesterday, Democrats were considering whether or not to lower that demand to $800 billion. Left unclear is how Democrats would get there. Their original proposal included several provisions: a “down payment” of $350 billion coming from a “miscellaneous revenue provision” and a $650-billion proposal to kick the tax reform can down the road until January; yet another trigger which would raise $650 billion if Congress fails to reach an agreement on tax reform, including an automatic “deficit reduction charge,” applied to a taxpayer’s income prior to any deductions; and the withholding of the $400 billion in entitlement cuts until either tax reform or the penalties for not passing it have taken effect.
Republicans realized the unseriousness of such a plan. Considering Democrats retain majority control of the government–control which has resulted in the Democratically-controlled Senate tabling 15 separate jobs bills passed by the Republican-controlled House and a failure to produce a federal budget in over 900 days–Republicans would be naive to think Democrats would negotiate in good faith, when not negotiating at all and allowing their own triggers to take effect would grant them most of what they want.
Thus, the odds of reaching a compromise, though better than they were last week, are only marginally so. Perhaps sensing the seriousness of acquiescing to the automatic triggers, Senate Majority Leader Harry Reid (D-NV) and House Majority Leader John Boehner (R-OH) met for 40 minutes in Boehner’s office on Tuesday. After the meeting, Reid was the more pessimistic of the two. “So far I have not seen any indication Republicans are willing to agree to this balanced approach,” he told reporters. Boehner was more optimistic. “I’m convinced, that if in fact there is an agreement, that it can in fact pass,” he said, after meeting with his party members.
Which party has the most to lose politically if they can’t reach a deal? A recent Pew Survey is all over the place, but one of the main themes that emerges is that 60 percent believe that the cost of the wars in Iraq and Afghanistan have contributed greatly to the debt, compared to only 24 percent who believe increased spending for domestic programs is to blame. Thus it would appear that cutting military spending, in spite of dire warnings, is a political winner, with Democrats likely being perceived as the victorious side.
Is it a winning hand? As of now the military has already absorbed $450 billion in cuts from the $7 trillion it was expecting over the next ten years. The failure to reach a deal would double that number to at least $900 billion or more. The result? “Such a large cut, applied in such an indiscriminate manner, would render most of our ship and construction projects ‘unexecutable’–you cannot buy three quarters of a ship or a building–and seriously damage our modernization efforts,” Panetta wrote to lawmakers. “We would also be forced to terminate most large procurement programs in order to accommodate modernization reductions that are likely to be required.” Panetta added that ten years of such reductions would result in a U.S. military with “the smallest ground force since 1940, the smallest number of ships since 1915, and the smallest Air Force in its history.”
The American Left seeks to downplay Panetta’s predictions, noting that such cuts would only reduce spending by the Pentagon to 2007 levels. In 2007, the federal government spent $2.73 trillion, including $594 billion for Defense and Homeland Security. In 2010, the federal government spent $3.7 trillion, including $658 billion for the military. An obvious question arises: if spending for national security can be reduced to 2007 levels, why can’t entitlement programs or the entire federal budget be reduced to 2007 levels?
As the Pew Survey reveals, such an idea is likely a non-starter for a public that has simultaneously grown weary of war and increasingly fond of entitlement programs. (In 2007 Social Security cost $581 billion and health care $568 billion. In 2010, Social Security cost $715 billion and healthcare cost $726 billion.) They would no doubt prefer cutting military spending than reducing entitlement spending.
Such a perspective is dangerously skewed. Ironically, it is skewed by the fact that, currently, Americans don’t feel particularly threatened by our nations’s enemies–due in large part to the enormous success of our military. Yet as 9⁄11 demonstrated, such a perspective could change in a single day. This raises the ultimate question: are Americans willing to accept a heightened level of risk that another day like 9⁄11–or worse–could occur, in order to reserve more funds for entitlement programs?
Americans need to remember that all budgetary issues are secondary to maintaining the freedom and security guaranteed by America’s fighting forces. We gut the military at our own peril. To paraphrase Leon Panetta, all the entitlement programs in the world won’t amount to anything if we “shoot ourselves in the head.”
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