Super Committee Deadline Approaches

November 8, 2011

The Joint Select Committee on Deficit Reduction, the so-called “Super Committee” (Committee) is nearing its deadline of Nov. 23 by when they must make their recommendations to Congress to reign-in the deficit. If they fail to provide an adequate level of deficit reduction by this timeline, the $1.2 trillion in automatic spending cuts over ten years will kick in and will reduce federal spending about 2.7 percent over the period.

Created by the Budget Control Act of 2011, the Committee is statutorially required to make recommendations to Congress about how to reduce the federal deficit by $1.5 trillion over ten years. The deficit over these ten years is projected the Congressional Budget Office (CBO) to be a total of $4.7 trillion. Over that period, federal outlays are projected to be $44 trillion. Thus, the Committee is seeking to reduce overall federal spending by a total of about 3.4 percent over the next ten years. These recommendations are due to Congress in just two weeks, on Nov. 23, 2011.

The Budget Control Act of 2011 requires Congress to vote on the Committee recommendations by Dec. 23. If the Committee fails to forward recommendations or Congress fails to pass legislation reducing the deficit by at least $1.2 trillion–even though the Committee is required to recommend higher reductions of $1.5 trillion–over 10 years by Jan. 15, 2012, automatic budget cuts (called sequestration) will occur.

This sequestration will amount to $1.2 trillion in cuts and will fall evenly on defense spending and non-exempt domestic spending. Sequestration would reduce overall federal spending about 2.7 percent. Programs exempt from automatic spending cuts include Social Security, veterans’ benefits, Medicaid, the Children’s Health Insurance Program (CHIP), unemployment insurance, Temporary Assistance for Needy Families (TANF), food stamps (SNAP) and many others. The cut to Medicare is capped at two percent.

CBO estimates that, if no legislation originating from the deficit reduction committee is enacted, the automatic enforcement process specified in the Budget Control Act will produce the following results between fiscal years 2013 and 2021:

  • Reductions ranging from ten percent (in 2013) to 8.5 percent (in 2021) in the caps on new discretionary appropriations for defense programs, yielding total outlay savings of $454 billion;
  • Reductions ranging from 7.8 percent (in 2013) to 5.5 percent (in 2021) in the caps on new discretionary appropriations for nondefense programs, resulting in outlay savings of $294 billion;
  • Reductions of 2.0 percent each year in most Medicare spending because of the application of a special rule that applies to that program, producing savings of $123 billion, and reductions ranging from 7.8 percent (in 2013) to 5.5 percent (in 2021);
  • About $31 billion in outlays stemming from the reductions in premiums for Part B of Medicare and other changes in spending that would result from the sequestration actions; and
  • An estimated reduction of $169 billion in debt-service costs.

The  Super Committee is co-chaired by Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.), with the following members: Sens. Max Baucus (D-Mont.), John Kerry (D-Mass.), Jon Kyl (R-Ariz.), Rob Portman (R-Ohio) and Sen. Pat Toomey (R-Pa.), and Reps.  Xavier Becerra (D-Calif.), Dave Camp (R-Mich.), James Clyburn (D-S.C.), Fred Upton (R-Mich.) and Chris Van Hollen (D-Md.).