The Joint Select Committee on Deficit Reduction, known as the Super Committee, failed to reach agreement on a $1.2 trillion deal to reduce the national deficit by the November 23 deadline established by the Budget Control Act. The act, which raised the nation’s debt ceiling when it passed in August, established the committee and directed it to identify $1.2 trillion in savings to be applied to deficit reduction over the next ten years (see Memo, 8/5). The 12-member bipartisan committee began meeting in September and was charged with providing a bill for Congress to review by November 23. Congress then would have had until December 23 to vote on the legislation.
The Budget Control Act includes a failsafe for reducing the deficit in lieu of a Super Committee plan. The act calls for $1.2 trillion to be sequestered from discretionary spending over ten years. Across-the-board cuts to defense and non-defense discretionary spending, applied equally between the two, would take effect beginning in 2013 to achieve the target amount.
When the Budget Control Act passed in August, it set 10-year caps on discretionary spending to enable deficit reduction. At the time the act was passed, the Super Committee’s goal was to identify other areas of spending to cut and to address the issue of revenues since limits were already placed on discretionary spending. A second round of cuts to discretionary programs eventually became part of the Super Committee’s debate, and some proposals could have cut non-defense discretionary spending even lower than would have sequestration.
The Super Committee’s failure now forces that second round of cuts to discretionary spending programs. While the sequestration trigger may have initially seemed like an incentive for the Committee to craft a deal, in fact, for some Republicans, it could have provided an incentive to fail.
While a 9% across the board cut to HUD and USDA Rural Housing programs could be devastating, cuts could be deeper if proposals to lessen the cuts to defense discretionary spending are successful. House Majority Leader Eric Cantor (R-VA) has suggested that Republicans block extension of the expiring payroll tax unless sequestration requirements for defense spending are lessened. President Barack Obama has stated that he will veto bills that overturn the sequestration trigger.