As President Barack Obama prepares to unveil proposals to spur U.S. economic growth and job creation, a bipartisan committee of lawmakers tasked with slashing the federal deficit prepares to convene for the first time. The Joint Select Committee on Deficit Reduction will have less than three months to craft a formula to cut the projected growth of America’s national debt by more than $1 trillion over 10 years.
If President Obama hopes to convince Congress of the need to spend more money in the short term to invigorate a languishing U.S. economy, the so-called deficit super committee has an opposite goal - cutting expenses in the long term to put the United States on a better fiscal path.
The committee of six Democrats and six Republicans arose from last month’s debt-ceiling agreement.
The committee gets to work during a period of low economic growth and job creation. Under such conditions, some Democratic committee members are questioning the wisdom of fiscal austerity.
Representative James Clyburn of South Carolina says his constituents have more pressing concerns than the federal deficit. “These people do not want to hear me talking about [spending] cuts. They do not want to hear anything but [creating new] jobs,” Clyburn said.
His words are echoed by another Democratic committee member, Senator Richard Durbin of Illinois. “We are fixed on the theme of our nation’s deficit and debt, and we should be. But I might remind my colleagues on both sides of the aisle, it is virtually impossible to balance the budget of the United States with 14 million people out of work. You need to put Americans back to work, earning a good paycheck, paying their taxes,” Durban said.
Republicans counter that reining in a spendthrift federal government is necessary for a sound economy, and failing to do so will choke off a fragile economic recovery and lead to fiscal ruin.
Although not a member of the deficit committee, Senator Jeff Sessions is the ranking Republican on the Senate Budget Committee.
“At some point, this country gets to a position where you cannot continue to borrow without damaging the economy. It is just that simple. Americans understand it. As one man told me, ‘You cannot borrow your way out of debt,” Sessions said.
The deficit committee’s recommendations are to be presented by late-November. They will come to a vote by late-December. Failure to identify at least $1.2 trillion in budget savings will trigger automatic spending cuts over a broad range of federal agencies.
It is hoped that the threat of such cuts will force members of the bipartisan committee to compromise and hammer out a deficit reduction package.
Economist Alice Rivlin, who served on a debt commission advising President Obama, says there is a more pressing reason to act.
“The real scary thing is what happens if we do not fix this [debt] problem. I think the committee has got to be telling itself every morning at nine o'clock, 'If we do not solve this problem, we could have a financial meltdown. The markets will turn against us; the economy could be wrecked for generations,'” Rivlin said.
After a long, bruising, partisan budget battle earlier this year, public opinion surveys show Americans more skeptical than ever about Washington’s ability to fix urgent national problems.
Douglas Holtz-Eakin, a former Congressional Budget Office chief, says if the debt committee fails to agree on budget savings, it would reinforce the public’s negative perception.
“The debt ceiling fight was a turning point in the American electorate’s feelings about Washington. And the pressure will be on this committee from a political point of view to prove that Washington still has some value to this country, and that the legislative process still works to some extent,” Holtz-Eakin said.
Committee members are bracing for an expected onslaught of lobbyists representing unions, business groups, and a host of special interests determined to preserve existing government programs and tax policies.
Even if the committee identifies more than $1 trillion in savings, and even if those cuts become law, budget experts say the national debt will continue to grow. Some say even stronger austerity measures will be needed in years to come.