It is no great surprise that with only days to go, the Congressional "supercommittee," given the Herculean task of carving an additional $1.2 trillion out of the federal budget, has failed to reach agreement. Why should six Republicans and six Democrats with diametrically opposed views agree in a few weeks, when Congress couldn't shake hands on it after months of wrangling, despite the guillotine blade of a federal default hanging over their heads?
Whether the supercommittee reaches agreement or not, however, the deficit hawks win. If they agree, either id="mce_marker".2 trillion gets cut from the budget or taxes go up by that amount; and the committee co-chair has categorically stated taxes are not going up, so that means the budget will be cut. If agreement is not reached, id="mce_marker".2 trillion in cuts automatically kick in, split evenly between domestic and military spending. Either way, the economy will wind up with id="mce_marker".2 trillion less in purchasing power. The result will be to reduce demand, kill jobs and put more people on the streets.
For the deficit hawks, however, it all seems to be going according to plan. The supercommittee is characterized as an emergency measure that was rushed through to avoid an arbitrarily imposed August deadline for freezing the debt ceiling, but it has actually been in the works for years. In 2009, it was called the "Bipartisan Task Force for Responsible Fiscal Action." That plan died when its Senate sponsors, Judd Gregg and Kent Conrad, failed to secure 60 votes for passage in the Senate. The Gregg-Conrad bill was criticized as railroading through legislation that would unconstitutionally slash domestic services without Congressional debate, but its task force would actually have been LESS autocratic than thesupercommittee, which has sweeping powers and needs only a simple majority among its 12 members to prevail.
What has been forced out of the debate is whether cutting the budget is a good idea at all. The Peter Peterson Foundation, which has been pushing "austerity" for years, has finally gotten its way. Hedge fund magnate Peter G. Peterson was chairman of the Council on Foreign Relations until 2007 and head of the New York Federal Reserve between 2000 and 2004. He made his fortune with the controversial Blackstone Group, which he co-founded and chaired for many years. The Peter Peterson Foundation was established in 2008 with a id="mce_marker" billion endowment to raise public awareness about US fiscal-sustainability issues related to federal deficits, entitlement programs and tax policies. The money was used to spearhead a massive campaign to reduce the runaway federal debt. Hysteria over the debt then prompted Tea Party newbies in Congress to hold a gun to Congress' head by arbitrarily capping the debt.
In the campaign to educate us to the debt's perils, we were repeatedly warned that when foreign lenders decided to pull the plug, the US would have to declare bankruptcy, that we were mortgaging our grandchildren's futures and selling them into debt slavery; and that all this was the fault of the citizenry for borrowing and spending too much. The American people, who are already suffering massive unemployment and cutbacks in government services, would have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the International Monetary Fund.
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