The bipartisan congressional deficit-reduction committee should press forward with its assignment to cut at least $1.2 trillion from the nation's borrowing over the next decade. It has about one more week to complete its work, and there are encouraging signs that new revenue as well as spending cuts are on the table. As clumsy as this process is, it offers the best chance for Congress to break the gridlock and agree to a reasonable balance of spending cuts and tax increases. If the committee gives up in a partisan deadlock, it would trigger unpalatable automatic spending cuts, political recriminations and more economic uncertainty.
Congress has handed off its responsibility to respond to the nation's fiscal challenges to a 12-member committee equally divided between House members and senators, and between Democrats and Republicans. The committee is to come to an agreement to cut the federal deficit by Nov. 23 so that Congress can vote by Dec. 23. Any agreement would be subject to a straight up-or-down vote.
If no agreement is reached, or if one emerges that is not a serious effort at political compromise and fails to win congressional approval, the federal budget will be automatically cut by $1.2 trillion over the next decade. The ax would fall equally on domestic and defense programs.
Such arbitrary budget cutting, which would take effect starting in 2013, could damage America's military preparedness, hobble investments in science and technology, and disrupt programs such as student loans that help the middle class and poor. Since the cuts would gore the sacred cows of both Republicans and Democrats, there is real impetus for the super committee to meet its deadline. But Democrats have been understandably reluctant to touch entitlements such as Medicare and Social Security without tax increases on the rich, and Republicans have been solidly opposed to any added revenue.
Encouragingly, Republicans have just recently come off that stance. Their initial plan would raise $300 billion through limiting tax deductions and other breaks that flow primarily to the wealthy. However, as Democrats point out, that plan includes a permanent reduction in the top income tax rate to 28 percent. The top rate now is 35 percent, which will return to 39.6 percent in 2013 when the Bush tax cuts are set to expire.
It is impossible to fully evaluate the merit of any proposal until it is complete, the details are clear and the trade-offs are apparent. But a blueprint to reduce the nation's deficit generally should be focused on raising revenues and cutting spending rather than ensuring lower tax rates for the country's richest households.
The Republicans' latest proposal would direct Congress' tax-writing committees to set lower tax rates and allow no more than $500 billion in new revenues. Democrats want to raise about $1 trillion in added revenues. But if a deficit-reduction deal is to be essentially in two parts with the tax-writing committees having a role, the deal should spell out how new tax revenues will be obtained. Too much vagueness would kick the hard decisions to others and potentially leave too much wiggle room.
Time is growing short, but the 11th hour of negotiations is often the most important one. A political compromise that cuts entitlements and adds revenues is the only way forward, and everyone seems to acknowledge that but Congress.