The consensus around Washington is that the failure of the super committee to reach agreement on $1.2 billion in deficit reduction over ten years was a setback for just about everybody involved. Congress showed that it could not achieve a compromise. President Obama demonstrated he has no power to broker a deal or even influence the process. The Department of Defense may have to absorb an additional $600 billion in budget cuts which, according to its senior civilian and military leaders, will be catastrophic. The nation may face another downgrading of its credit. Looks like a lose-lose situation.
Well, not quite. The big winner in all of this is the Tea Party. Look at the current situation from a slightly different perspective. The failure of the super committee means that the $1.2 trillion in deficit reduction must be accomplished through spending cuts alone. Isn’t this what the Tea Party wanted? If defense has to absorb nearly a trillion dollars in spending reductions how can anyone argue that other departments and programs should not also take a hit? In effect, by imposing draconian consequences for the failure to reach a compromise, our political leaders, particularly the Democrats who came up with the idea of including a threat to defense spending in the law that created the super committee, have set the terms for future spending reductions. If defense, which is approximately 20 percent of federal spending, must absorb a trillion dollars in spending cuts, then the rest of the budget should be required to absorb four times as much. That is five trillion dollars. All together, that means five trillion in cuts over the next decade. What a victory for the Tea Party.
The impact of the impasse on the deficit is also having ripple effects. For the first time in more than a generation, there is a willingness to consider changes to military compensation. If the military takes a hit with respect to pensions and medical benefits, how can public sector unions at any level of government refuse to modify their benefits packages? In addition, as defense officials have pointed out, sequestration will require the firing of hundreds of thousands of defense department civilians. This means smaller government. Another victory for the Tea Party.
The fact that the tax code is under review and there is general agreement to pursue reforms that reduce rates and broaden the tax base is also something the Tea Party, along with others, advocates. While such a move will raise more revenues it will do so in a way that still constrains the growth of government.
Whether you agree with the Tea Party or not, they seem to be achieving their objectives. If it unfolds as mandated in the Budget Control Act, sequestrations will be a messy, destructive affair. But it sure will shrink the deficit, and that’s what the Tea Party wanted.
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