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Life Health > Health Insurance > Life Insurance Strategies

Budget Battle: A Super Committee is Born

By Arthur D. Postal

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WASHINGTON BUREAU — Congressional leaders are starting to pick the negotiators whose work may determine whether the federal government will face wide-ranging, automatic budget cuts.

The new Budget Control Act of 2011 requires the Democratic and Republican leaders in the House and Senate to each pick 3 members for a new Joint Select Committee on Deficit Reduction.

If the panel, which the Obama administration is calling the “Super Committee,” fails to come up with recommendations for $1.5 trillion in budget cuts over 10 years by Nov. 23, and if Congress does not then proceed to approve $1.2 trillion in budget cuts by Dec. 23, then officials in the Obama administration’s Office of Management and Budget (OMB) are supposed to apply “sequesters,” or spending cuts, with 50% of the cuts affecting defense programs, 2% affecting Medicare, and 48% affecting nondefense programs other than Medicare.

The picks are:

  • Senate Majority Leader Harry Reid, D-Nev.: Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee; Sen. Patty Murray, D-Wash.; and Sen. John Kerry, D-Mass.
  • Senate Minority Leader Mitch McConnell, R-Ky.: Sen. John Kyl, R-Ariz.; Sen. Rob Portman, R-Ohio, and Sen. Pat Toomey, R-Pa.
  • House Speaker John Boehner, R-Ohio: Rep. David Camp, R-Mich., chairman of the House Ways and Means Committee; Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee; and Rep. Jeb Hensarling, R-Texas.

House Minority Leader Nancy Pelosi, D-Calif., has not yet named her delegates. The Budget Control Act gives her until 14 days after Aug. 2, the date of the enactment of the act, to appoint her delegates.

The Budget Control Act calls for Reid and Boehner each to name a Super Committee co-chair.

Reid has made Murray one of the co-chairs, and Boehner has made Hensarling the other co-chair.

One of McConnell’s appointees, Portman, served as the OMB director under President George W. Bush.

Joe Lieber of Washington Analysis, Washington, a firm that advises institutional investors and hedge funds, says Super Committee appointments announced so far “help to confirm our view that the committee will have a very difficult time reaching an agreement on legislation by Nov. 23.”

“We continue to believe that the most likely outcome will be deadlock, and that the across-the-board cuts under sequestration will take place,” Lieber says.

The cuts would not start to take effect until 2013, however, and that would give Congress time to reverse the cuts, Lieber says.

Kerry and Murray “are two reliable liberal Democrats who can be expected to protect Medicare, Medicaid and Social Security,” Lieber says. “No deal changing these entitlement programs will get these two members’ votes unless it is accompanied by considerable tax increases. Baucus has been known to stray from the Democratic base, so in that respect the pick is somewhat risky for Reid.”

The Senate Republicans on the committee can all be expected to toe the leadership hard line against tax increases, and Camp and Hensarling also come from the conservative wing of the Republican Party, Lieber says.

Lieber says he believes Upton is the least conservative Republican on the committee.

“Recall that just after Republicans took back the House majority a number of conservatives did not want Upton to serve as chairman of the powerful Energy and Commerce Committee because they didn’t think he was conservative enough,” Lieber says. “With that said, however, we think it unlikely that Upton will stray from the positions of the GOP leadership.”

Other federal budget coverage from National Underwriter Life & Health:

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