UPDATE NO. 2 - JOINT SELECT COMMITTEE ON DEFICIT REDUCTION
Robert J. Tennessen
On Wednesday, October 26th Republican and Democrat members of the Joint Select Committee on Deficit Reduction presented their respective deficit reduction proposals. The plans show a marked divide over the nature of the cuts to be made and whether or not to include major tax increases. Each proposal was flatly rejected by the other side.
Congressional committees have been tasked with making recommendations to the Select Committee on cuts to budgets they oversee. For example, Agriculture leaders have proposed cuts of $23 billion over 10 years. This figure is more than the cuts that would be triggered if the Select Committee fails to craft and pass a bill by the end of the year.
The deadline of November 23rd for the Select Committee to reach agreement and vote on a deficit reduction plan is fast-approaching. If a plan to reduce the deficit by at least $1.2 trillion over 10 years is not passed by the deadline, across-the-board cuts will be triggered and take effect in 2013. Failure of the committee to succeed in its mission could also raise the risk of another U.S. credit downgrade.
Some budget experts believe that $1.2 trillion in cuts will not be enough to stabilize the federal debt which is growing faster than the economy. Congress may ultimately need to cut $4 trillion to $6 trillion. Although budget cutting poses political hazards, whether its $1.2 trillion or $6 trillion, another round of reduction will most likely be necessary to stabilize the debt if the agreement only cuts $1.2 trillion.




