NEW YORK — Last August, as part of an agreement to raise the U.S. debt ceiling, Congress created the Joint Select Committee on Deficit Reduction to come up with a minimum of $1.2 trillion of cuts over the next 10 years.
NEW YORK — Last August, as part of an agreement to raise the U.S. debt ceiling, Congress created the Joint Select Committee on Deficit Reduction to come up with a minimum of $1.2 trillion of cuts over the next 10 years.
Failure of the so-called supercommittee to produce a bill with at least that much in savings would trigger automatic spending cuts of an equal amount, divided equally between defense and nondefense spending, starting in 2013.
“The sequester wasn’t meant to be implemented,” Jeffrey Zients, the acting director of the Office of Management and Budget, said in a July 10 op-ed on Politico.com. “It was designed to cause cuts so deep that just threatening them would force members of Congress to agree on a big, balanced package of deficit reduction.”
The stick was about as terrifying as the carrot was tempting. The supercommittee failed to reach an agreement on spending cuts, or, more correctly, cuts in the growth of government spending. Now lawmakers insist that the sequester can’t happen, with Republicans warning of the risks from gutting the military, and Democrats whining about slashing domestic programs. Zients agrees, saying the cuts “would be terrible for our country” and “don’t have to happen.”
In other words, Congress isn’t accountable for its actions.
Sound familiar? An institution makes decisions or takes actions, the consequences of which are so dire — think “systemic risk” — that they necessitate an intervention or a bailout. The big banks? Try Congress. The same too-big- to-fail principle applies. Maybe the same break-them-up solution does, too.
The banks failed to perform due diligence when they made loans to unqualified homebuyers. They sold the mortgages before the ink was dry to investment banks that packaged, sliced and diced the loans and sold pieces to investors. When the pile of bad debt threatened to sink the financial system, the Federal Reserve and U.S. government stepped in to rescue the banks in order to save the economy from collapse.
The same holds true for Congress, which acted irresponsibly (again) by focusing on short-term fixes instead of long-term solutions to the deficit. Now, with the expiration of an array of tax cuts and spending measures threatening to send the economy into recession, according to budget experts, lawmakers get a second chance.
Sen. Patty Murray, D-Wash., said recently her party was ready to let the economy drive over the fiscal cliff if Republicans didn’t agree to raise taxes on top earners. This seems more like a negotiating ploy than a real threat. If businesses really are holding off on new investments until they see how things play out, then doing nothing runs the risk of weakening the economy further and angering voters in November.
At the last minute, our elected representatives will probably patch something together to avert the fiscal cliff. In other words, like the banks, they will live to die another day.
Perhaps we should think about breaking up the legislative body, or the equivalent: shortening the lifespan of any class of lawmakers.
There’s only one problem: It would take a constitutional amendment, as dictated by a 1995 Supreme Court decision. The president’s term is already limited to two by the 22nd Amendment. It would be much more difficult to get two-thirds of both houses of Congress to effectively vote themselves out of office.
That said, 185 members of the House and Senate have signed the U.S. Term Limits Constitutional Amendment Pledge, which would limit terms to three in the House and two in the Senate.
Opinion polls suggest that 70 percent or more of the public favors limited terms in office for members of Congress.
The nation’s Founding Fathers were afraid of creating a permanent ruling class, like the English aristocracy, and believed in rotation in office — an idea that dates back to ancient Greece. One of the founders, George Mason, saw value in legislators returning to live among constituents in order to “participate in their burdens.” James Madison worried that legislators seeking re-election would serve their narrow self-interest at the expense of the country’s.
He was right to worry. The United States has created something akin to a permanent political class, with the incumbency rate for the House averaging 93 percent over the last 24 elections.
It makes you wonder what all the fuss over “wave elections” is about if incumbency confers such a powerful advantage.
Wouldn’t we be better off if the U.S. enacted term limits to force frequent rotation in office? Something automatic — at least more automatic than next year’s spending cuts, which are unlikely to happen.
Caroline Baum is a Bloomberg columnist.