Committee for a Responsible Federal Budget

Could a “Go Big” Approach Increase the Chances of the Super Committee Succeeding?

Sep 26, 2011

Yes, it could! Okay, you’re probably itching for a more fleshed out response than “yes”, so let’s walk through the logic.

The “Go Big” campaign is urging the Super Committee to come up with a deal two or three times as large as the savings in their mandate, and large enough to stabilize the debt at a reasonable level. We think going after the big deal could actually increase the chance of success. CRFB president Maya MacGuineas touched on this briefly today in a New York Times article, showing that getting to $1.2 trillion might actually be more difficult than agreeing on a larger plan.

To read more about all the reasons to “Go Big” and those who have been pushing the message, check out our new page here.

The logic of why “Go Big” could improve chances of success

With explicit discretionary caps already in place as a result of the Budget Control Act from this summer, it’s unlikely that further notable reductions to discretionary spending alone should be able to attract bipartisan support. So that means the majority of savings from any deal with have to come from changes to other areas of the budget: entitlement programs and revenues.

Let’s start with entitlement spending. Democrats have indicated that they are not willing to agree to significant entitlement reforms without revenues. Democrats also want to avoid another debt ceiling-like deal that featured spending cuts but no revenues, so any deal, in their minds, will have to have revenues. Maya MacGuineas made these points in a New York Times article today. In fact, the President even made this principle explicit in his submission to the Super Committee, stating that he “will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share." While it may be possible to reach an agreement on some of the savings that have already received bipartisan support or consideration, including many of the "other mandatory" policies discussed in the Biden discussions this summer and proposals in other fiscal plans, it’s not possible to achieve significant entitlement savings without savings from health programs. And Democrats have made it clear that they are not going to consider major entitlement health reforms if no revenues are included.

Republicans are far more willing to consider revenues if two conditions are met: 1) they are part of an overhaul of the tax system, or pro-growth tax reform, and 2) they are combined with structural entitlement reforms to ensure that the revenues go to deficit reduction rather than ever-expanding entitlement programs. This would require significantly more in savings than what was proposed by the President in his submission to the Super Committee. (It would should also require reforms to make Social Security solvent for the long-term, though much to our frustration, no one seems to be talking about that.)

This harkens back to the comprehensive fiscal plan, or grand bargain, that President Obama and Speaker Boehner were working on in the lead up to the debt ceiling deal. Ultimately, a final agreement was not reached, but in recent remarks to the Economic Club of Washington, Boehner reaffirmed this point by stating that $800 billion in new revenues were only on the table if the President was “willing to make fundamental changes in our entitlement programs.”

So it seems to us that if we put meaningful entitlement reform and additional revenues as part of tax reform on the table, we could get to a deal, and a really good one. But without one, you lose the other, and then are not left with much at all in terms of the non-gimmicky savings options, even to get to the already not big enough goal of $1.2 trillion.

The Political Case for “Go Big”

One of the lessons from the Fiscal Commission that co-chairs Erskine Bowles and Alan Simpson frequently mention is that by making the package bigger, they were actually able to get more people on board for it. They argue that is true because a big package creates the feeling of shared sacrifice in which various constituencies and interest groups are more willing to accept changes provided that everyone else is sharing in to burden too. The second reason is that, the words of Alan Simpson, “only big ideas have the power to inspire.” A plan sufficient in size and scope to solve our fiscal challenges will stand a better chance against efforts by affected groups to derail it than an approach that fails to solve the problem. A small plan that generates intense opposition from the groups that are affected but doesn’t promote shared sacrifice and doesn’t sufficiently address rising debt is the worst of all worlds.

Go Small?

Sure, there are other mandatory programs in which both parties have called for savings, and significant overlap in proposed changes to Medicare and Medicaid. Just check out our table of overlapping policies to see all the common ground. But assuming that only some of these are agreed to, such as Medicaid reforms and some changes to Medicare payments and cost-sharing given the President’s insistence that his Medicare reforms come only with new revenues in any final plan, the potential overlap likely would fall well short of the $1.2 trillion goal:

Budget CategoryPossible Savings
Chained CPI (includes both spending and revenue savings)$230 billion
Possible Health Care Savings$100 billion
Possible "Other Mandatory Savings$200 - $300 billion
Possible Discretionary Savings$0 - $100 billion (?)
Reduce or Eliminate Various Tax Breaks$0 - $50 (?)
Interest$100 - $150 billion
Total$625 - $900 billion

*Numbers are very rough possible scenarios and are heavily rounded.

Any additional savings would likely require all mandatory spending and revenues to be on the table.

So, is a small deal possible? Yes. but we think not only is a “Go Big” necessary, it is actually easier to achieve. So we continue to wish the Super Committee well, lend them our support, and urge them to Go Big.