Monday, August 29, 2011

Deficit Reduction Supercommittee Primer

The President signed the Budget Control Act of 2011 into law on August 2 (text available here).  The law authorized a $900 billion increase in the Federal debt ceiling.  The legislation in part created a twelve-member bipartisan Joint Select Committee on Deficit Reduction (which almost immediately became known as the "Supercommittee").  The job of the Supercommittee is to identify from $1.2 to $1.5 trillion in deficit reduction (in the form of either spending cuts or new revenue) over the 2012 to 2021 period and to submit that proposal to Congress for a straight up or down vote.  

Between September 7 and November 23, the Supercommittee will have its window of opportunity to make targeted cuts from Federal programs.  If a proposal is developed and then approved by the Supercommittee, the committee’s report and legislative language is required to be issued by December 2, and then be presented to the House and Senate on a "take-it-or-leave-it" basis.  Congress will need to vote on the Supercommittee's proposal by December 23.

If December 23 passes without Congressional approval of the Supercommittee’s proposal, then “sequestration” forces automatic spending reductions of $1.2 trillion, including $600 billion in defense cuts, and $600 billion in cuts from all other programs, through 9 percent across-the-board spending reductions (except Medicare, which would be cut by only 2 percent).

If the Supercommittee fails to reach agreement or produces less than $1.2 trillion in deficit reduction, then the President is authorized to increase the debt ceiling by $1.2 trillion.  However, if Congress passes a Supercommittee plan to reduce the deficit by $1.5 trillion (or more), then the President may increase the debt ceiling by $1.5 trillion.

Although provisions to raise the debt limit and create the Supercommittee drew most of the attention to the legislation, the measure also importantly established federal spending limits for the next two fiscal years (2012 and 2013).  And while members of Congress will likely still disagree over how much spending is funneled toward which Federal agencies and defense, Congressional Democrats and Republicans alike have noted that the bipartisan compromise on 2012 and 2103 spending contained in the legislation makes it unlikely that an appropriation's impasse will bring the Congress to the brink of closing the government before Federal spending authority runs out on September 30 (the end of the current fiscal year).

The 12 Super Committee members, with links to their official web pages) include:
Senator Murray and Congressman Hensarling will serve as Supercommittee Co-Chairs.

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