Will the Super Committee Act Out of Fear?
“Messiness” has been a prime characteristic of legislation since the days of Solon. So, the mess surrounding the operations of the Joint Select Committee on Deficit Reduction and Congress’ “work” on a jobs bill shouldn’t surprise anyone. What does always seem to surprise observers almost every single time is when the messiness turns into legislation.
At the risk of sounding optimistic, a stance guaranteed to bore or amuse almost everyone in this hyper-cynical city, we see signs that three major socio-political trends are beginning to meld into what may become a Congressional “success” by the end of the year.
First, the three trends: mounting anger at disparity of incomes and outcomes, exemplified in part first by the Tea Party movement and now by the growing “Occupy Wall Street” marches; widespread fear about job losses and another recession, revealed in every national poll in the past 18 months; and, the growing awareness in Congress that it is largely believed to be incompetent at best and venally so at worst.
So far, Wall Street and other elites have pooh-poohed the would-be occupiers as “hippies.” “silly students,” “union goons.” But members of Congress see none of those kinds of people—they see voters and they see headlines. Wall Street apparently believes that nothing will ultimately come of all this distraction and that Congress will surely ignore them. Wall Street may be right about Washington, D.C., for once.
And, yet. Senate Majority Leader Harry Reid has introduced a jobs bill that is paid for by a tax surcharge on persons earning more than $1 million a year. One finds increasing discussion of a financial markets transaction tax in the halls of Congress. The fact that some Wall Street “titans” received tens of millions in bonuses and compensation AFTER the tax-payer bailout has been lost on almost no one. Reid tactically, and strategically, is beginning the long prelude to next year’s election theme: “Republicans voted to let billionaires avoid taxes, but didn’t even bother to pass a bill to help the working man keep his job.”
Describe it as class warfare, or math, or whatever cute phrase you wish. In this political atmosphere it will resonate.
The Tea Party phenomenon and the Occupy Wall Street initiative stem from anger and fear, as we have written before. Don’t listen to those who say that the two trends are diametrically opposed. They aren’t. They are the first real manifestations of growing social unrest in a nation facing prolonged economic distress, governed by policymakers widely believed to be part of the problem, not part of the solution.
Will Reid’s bill pass the Senate? Probably not. Yet. But if the nation suffers another six months of joblessness and more headlines about foreclosures, it may emerge in some form or another, as will serious discussion of the financial transaction tax.
Meanwhile, these suggestions and others besiege the Joint Select Committee. The 12 members of the JSC now realize three things: 1) the view of the global media is on them; they cannot do nothing; they need to figure out how much they can do, how much they can punt back to Congress in some manner, and how to protect themselves from bearing any negative economic or market consequences as a result of the JSC’s actions or inactions.
The conventional wisdom remains that the JSC will prove a failure.
We disagree to a large extent. Fear provokes interesting behavior. We now predict that the JSC will create legislation producing $1.0-1.2 trillion in deficit reduction over the next decade and then try to pass on to the other 523 Members of Congress the task of finding another $2-2.5 trillion during the next 18 months. During that next 18 months, don’t be shocked if some of the suggestions emerge in direct relationship to what is now happening on Main Street and in Wall Street.
