A Look Inside the Super Committee

November 7, 2011

Wall Street Journal

By Stephen Moore

'I can find $1.5 trillion of budget savings in my sleep," says Jeb Hensarling, the Republican co-chairman of the 12-member deficit reduction committee. "The hard part is getting six Democrats to agree to do it."

If he can't, there will be no consensus on a plan to reduce deficits over the next decade and the so-called super committee will surely blow up, just as most on Wall Street and in Washington are betting will happen. To beat the statutory deadline for a congressional vote before Thanksgiving, a deal, if there is one, will almost surely have to be struck by the end of this week.

Insiders on the panel say that the deal being offered by Democrats is less than $1 of spending cuts for every $1 of new taxes. Democrats want to count the $900 billion of discretionary spending cuts already agreed to in the debt bill and $1 trillion in troop withdrawals from Afghanistan and Iraq, which may not happen. Meanwhile they are insisting on close to $1.2 trillion of tax increases in exchange for less than $1 trillion in entitlement reforms. The president's own deficit reduction committee, Simpson-Bowles, offered $2 of cuts for every $1 of new taxes. The GOP House budget passed last spring contained some $4.5 trillion in cuts—three times more than the super committee must find.

Democrats also keep pressing for higher tax rates on the rich. "We have no intention whatsoever of raising tax rates—period," Mr. Hensarling states emphatically.

But raising rates and raising revenues are different. Eliminating loopholes in exchange for making the Bush tax cuts permanent after 2013 is on the table—and by broadening the tax base, this could bring in tens of billions of new revenues each year. Says Mr. Hensarling: "Republicans want more revenues. We want more revenues by growing the economy; we're not happy with revenues at 14% of GDP, but we don't want to do it by raising rates."

Read the full article here.

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