Congress Seeking a Way to Call the Whole Fiscal Cliff Off
Call it the partial fix to the partial fix to the partial fix. National Journal's Dan Friedman and Billy House report that leading lawmakers are discussing a plan to make a "down payment" of cuts that would amount to half of the $110 billion in sequestration, which is set to go into effect in January. For practical purposes, this would potentially delay sequestration for a matter of months. If you consider that sequestration itself was a partial fix to a previous partial fix, it's quite the dispiriting solution.
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According to House and Friedman, the plan was concocted by Senate Majority Leader Harry Reid and the White House Office of Management and Budget. The deal relies on President Obama winning the election and Congress striking a deal during the lame-duck session, which is the last opportunity to delay the automatic January cuts. House and Friedman say the partial cuts would be targeted and a "framework would task committees of jurisdiction with finding additional cuts that would be imposed later next year." Keep in mind, the looming fiscal cliff, which the Congressional Budget Office says will plunge the U.S. into another recession if enacted, is also a problem Republicans will have to address regardless of a Romney or Obama victory. In terms of the deal succeeding, Democratic aides say an Obama victory could win Democrats enough leverage to bring Republicans on board.
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Even if that's the case, the idea of a partial fix to sequestration is pretty remarkable. If you recall, sequestration itself was never supposed to happen. It was the last resort for the Joint Select Committee on Deficit Reduction, otherwise known as the Super Committee, the bipartisan cohort of lawmakers tasked with finding $1.2 trillion in deficit savings in 2011 so automatic cuts in 2013 wouldn't be necessary. They were given the job with the creation of the Budget Control Act of 2011, which itself was designed to prevent a sovereign default that could've resulted from the year's debt-ceiling crisis. But the Super Committee of course failed, a failure that followed the failure of Republicans and Democrats in Congress to find a solution on the federal budget without the gimmicks of automatic cuts or historically unique Super Committees.
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During Monday's debate, President Obama said the automatic cuts "will not happen," suggesting that he expects some compromise to be met before January. Apparently, Goldman Sachs CEO Lloyd Blankfein is of the same mindset, telling CNBC today that there will be a compromise between Republicans and Democrats. If this latest deal is what's meant by a solution, it would seem that history is repeating itself: More kicking the can down the road.
