The House GOP and the Supercommittee
Republicans try to avoid another downgrade.


Andrew Stiles

The House Republicans are already gearing up for what is likely to be another consequential, and perhaps divisive, spending vote.

The so-called supercommittee, a twelve-member panel created in August as part of the bipartisan deal to raise the debt ceiling, has until November 23 to produce at least $1.2 trillion in savings over the next decade. Congress must then vote on the committee’s plan sometime before Christmas. Like previous high-profile spending votes, this one is sure to have far-reaching implications, with the potential to expose the long-simmering rift between House GOP leaders and the conservative wing of the caucus.

As he has done all year, majority whip Rep. Kevin McCarthy (R., Calif.) will be hosting a series of “listening sessions” with members to prep them on the details of the supercommittee process and the various possible outcomes. Leadership aides insist that the sessions are not a preemptive effort to whip the upcoming vote, but rather to educate members about the supercommittee timeline, as well as the possible implications of the plans they might vote on.

GOP leadership aides tell National Review Online that while is it too early to predict what the supercommittee plan will look like, the leadership plans to emphasize to members the potential consequences of a failure to reach an agreement on meaningful deficit reduction.

For instance, if the supercommittee falls short of the $1.2 trillion target, the debt-ceiling agreement requires that the difference be made up automatically through a process known as sequestration, which would prohibit the U.S. Treasury from releasing funds already allocated to the various federal agencies. If the supercommittee deadlocks, or if Congress does not approve the committee’s recommendations, the entire $1.2 trillion amount will be sequestered.

This aspect of the August debt deal was, according to a senior GOP aide, “designed to be nasty enough to force action on both sides.” Republicans are particularly concerned about the disproportionate impact sequestration would have on the defense budget. About 42 percent ($454 billion over the next decade) of the $1.2 trillion in forced cuts would fall on defense discretionary spending, which would come on top of the $350 billion in cuts (over ten years) mandated in the August deal. Defense Secretary Leon Panetta warned that further cuts would be “completely unacceptable” and “do real damage to our security.” Rep. Buck McKeon (R., Calif.), chairman of the House Armed Services Committee, went so far as to say that he would prefer to raise taxes than see the cuts enacted.

GOP leaders are also keenly aware of the threat of another downgrade to the nation’s AAA credit rating if the supercommittee cannot agree on a suitable plan. In fact, the financial community has been fairly explicit in this regard. Fitch Ratings, one of the three major credit agencies (along with Moody’s and Standard and Poor’s, the latter of which already downgraded the United States to AA+), has said that a failure to produce a plan “would likely result in negative rating action.” On Monday, Merrill Lynch announced that if the supercommittee fails to produce a “credible long-run plan,” a second or third downgrade is to be expected. Republicans aides tell NRO they view another downgrade as all but inevitable if the supercommittee fails. “They’re coming fast and furious,” one says.

For his part, House Speaker John Boehner (R., Ohio) has clearly stated his expectations for the supercommittee. In a September address to the Economic Club of Washington, D.C., the speaker reiterated his insistence that tax increases are unacceptable. “It’s a very simple equation,” he said. “Tax increases destroy jobs.” Spending cuts and entitlement reform, Boehner argued, were the only reasonable paths to meaningful deficit reduction. And when it comes to spending cuts, he said, budget gimmicks — such as counting the scheduled reduction in spending on the wars in Iraq and Afghanistan as “savings” — would not be tolerated. “Deficit reduction shouldn’t just be about quantity; it should be about quality,” he said. “A billion dollars in imaginary savings from war spending that was never going to happen is not the same as a billion dollars in savings that strengthens our entitlement programs.”