The Heritage Foundation has consistently urged, and continues to urge, that the congressional Joint Select Committee on Deficit Reduction, known as the Supercommittee, “go big” with its recommendations, to “drive federal spending down — including by fixing ever-expanding entitlement programs — toward a balanced budget, while preserving our capability to protect America, and without raising taxes.” Heritage provided a detailed plan by which the Supercommittee could accomplish that goal. Heritage President Edwin J. Feulner made clear that “[t]his battle is about both getting spending under control and limiting the size and scope of government.” As he said, “[m]ore taxes means more government.”
Public discussion of the Supercommittee has focused on two possible outcomes — either the Supercommittee process reduces future deficits by $1.2 trillion or automatic statutory adjustments in discretionary spending limits (enforced by automatic cuts called “sequestration”) under the Budget Control Act (Public Law 102-25)(BCA) reduce future deficits by $1.2 trillion. There has been little focus on the third possible outcome, which is a combination of the first two. Under the third possibility, the Supercommittee process yields some deficit reduction, but less than $1.2 trillion, and sequestration makes up the difference, yielding a total of $1.2 trillion in deficit reduction.
Section 401(b)(2) of the BCA set as a goal for the Supercommittee “to reduce the deficit by at least $1,500,000,000,000 over the period of fiscal years 2012 to 2021.” Sections 401(b)(3)(B) and 402 require the Supercommittee to vote, not later than November 23, 2011, on “a report that contains a detailed statement of the findings, conclusions, and recommendations” and “proposed legislative language to carry out such recommendations.” Congress will then consider the Supercommittee legislation under expedited procedures, the key features of which are that the legislation is not subject to amendment and receives a vote on final passage not later than December 23, 2011.
Under sections 251 and 251A of the Balanced Budget and Emergency Deficit Control Act as amended by sections 101 and 302 of the BCA, if January 15, 2012, arrives and Supercommittee legislation has not been enacted that achieves at least $1.2 billion in deficit reduction for fiscal years 2012 through 2021 (that is, 80% of the goal assigned to the Supercommittee), automatic statutory adjustments in discretionary spending limits take place for fiscal years 2013 through 2021. To determine how much deficit reduction is necessary to meet those adjusted discretionary spending limits for each of the nine fiscal years of 2013 through 2021, section 251A(3) provides as follows:
(3) CALCULATION OF TOTAL DEFICIT REDUCTION.—OMB shall calculate the amount of the deficit reduction required by this section for each of fiscal years 2013 through 2021 by—
(A) starting with $1,200,000,000,000;
(B) subtracting the amount of deficit reduction achieved by the enactment of a joint committee bill, as provided in section 401(b)(3)(B)(i)(II) of the Budget Control Act of 2011;
(C) reducing the difference by 18 percent to account for debt service; and
(D) dividing the result by 9.
Thus, if Supercommittee legislation is enacted by January 15, 2012, but it provides less than $1.2 trillion in deficit reduction over fiscal years 2012 through 2021, the Office of Management and Budget will calculate the amount of spending cuts necessary to achieve a $1.2 trillion reduction, giving “credit” toward those spending cuts for the amount of deficit reduction achieved in the Supercommittee legislation, if any is enacted, and applying some additional rules relating to direct spending and Medicare. The reduced spending limits as so calculated would then be enforced through a statutory sequestration process, beginning with a sequestration on January 2, 2013, for fiscal year 2013.
Heritage hopes conservatives on the Supercommittee and in Congress as a whole will stand tall and protect Americans from a tax increase. As Dr. Feulner said, more taxes means more government. If the Supercommittee has the will to do so, it can muster even more than its statutory deficit reduction goal through spending cuts alone. The Supercommittee should not recommend a tax hike and the Congress should not hike taxes. Period.
If the Supercommittee pulls together seven votes for spending cuts only, but the spending cuts are not large enough to reach $1.2 trillion in deficit reduction, then the automatic statutory adjustments in discretionary spending limits will make up the difference, to provide for $1.2 trillion in deficit reduction. As a practical matter, Congress will, either in the Supercommittee legislation itself or in legislation enacted promptly thereafter, need to correct the BCA impact so as to fully fund defense notwithstanding the automatic statutory adjustments, with associated offsetting reductions to non-security spending.
Conservatives, please remember and achieve the objective: drive federal spending down — including by fixing ever-expanding entitlement programs — toward a balanced budget, while preserving our capability to protect America, and without raising taxes.