By Fareed Zakaria, CNN
Many are bemoaning the super committee’s failure, but I actually don’t see it as such a big deal. Those who are concerned about the budget deficit will see an automatic $1.2 trillion in cuts over the next decade starting at the end of next year. That’s more than anyone thought we’d get beforehand. And those who want tax revenues to increase will see the Bush tax cuts automatically expire at the end of 2012.
So if Congress does nothing, two sequestration processes go into effect: A budget cut and a tax increase. These two measures will cut over $4.5 trillion from the U.S. deficit over the next 10 years. That’s more than the Simpson-Bowles Commission proposed. And as Ezra Klein points out, that’s $3 of tax increases for every dollar of spending cuts. The Republicans' strategy of blocking every deal suddenly doesn’t look so smart.
I think that the real question we should be asking ourselves is whether or not we want these tightening, contractionary measures to occur now when the U.S. economy is still relatively weak. Better policy would be to delay the onset of cuts for a year or two until the economy begins to recover. As long as we can signal to the world, to markets and to ourselves that we have a serious, reliable process in place to deal with the deficit, there’s no immediate urgency.
As for the much-feared defense cuts – the $600 to $700 billion that will be whittled away from the Defense Department over the next 10 years - I don’t feel that this is as draconian as people think. Remember, we’re talking about cuts from an extraordinarily high starting point. As I noted in a Washington Post column back in August, the Pentagon’s budget has risen for 13 years, which is unprecedented.
Between 2001 and 2009, overall spending on defense rose from $412 billion to $699 billion, a 70 percent increase, which is larger than in any comparable period since the Korean War. And over the past decade, U.S. defense spending has gone from about a third of total worldwide spending to nearly 50 percent. In other words, we spend more on defense than almost all the planet’s remaining countries put together. So the fact that we’re going to go down from these peaks over a ten-year period does not worry me so much.
It’s also worth pointing that there is enormous waste in the Pentagon. Most talk of waste, fraud and abuse in government is vastly exaggerated; there simply isn’t enough money in discretionary spending. Most of the federal government’s spending is transfer payments and tax expenditures, which are — whatever their merits — highly efficient at funneling money to their beneficiaries. The exception is defense. There is so much overlap among the military services, so much duplication and so much waste that no one bothers to defend it anymore.
So even though people say the failure of the super committee is a sign that nothing will ever get done on the budget issue, the fact is that the exact opposite is true. Congress could have, of course, done much better. The upcoming cuts are not finely targeted or well-timed. But maybe that’s how American democracy is working right now. And until Congress can agree on a better plan, we can at least be thankful that by doing nothing our political leaders can accomplish quite a lot.