Much is at stake as the Joint Select Committee on Deficit Reduction, as the panel is officially known, knuckles down ahead of its pre-Thanksgiving deadline. The panel could opt to undo decades of work by K Street lobbyists who carved out tax and other advantages for their causes and corporations. It could raise the standing of Congress by presenting a viable plan that distributes the pain, or it could further sink the institution's public esteem by dissolving in acrimony and stalemate. It could put the federal government on the path to fiscal responsibility, or it could punt – and risk a rebuke from the markets and the rating agencies that determine America's creditworthiness.
"The super committee represents our best, and possibly only, chance to make the real reforms needed to return our country to fiscal health," said Rep. Mike Simpson (R) of Idaho in a statement, as the Nov. 2 bipartisan letter made its way to the panel.
No one, however, should be sanguine about the panel's prospects. Powerful forces drive lawmakers to hold to partisan lines. For Republicans, it's a commitment to no net increase in taxes. For Democrats, it's no significant cuts to entitlement spending, such as Medicare, Medicaid, or Social Security, unless Republicans agree to tax hikes.
That impasse puts taxes at the center of any bid to reach a deal. Nearly every Republican in Congress – and all six GOP members of the deficit panel – have signed the "taxpayer protection pledge" maintained by Americans for Tax Reform (ATR) and its president, Grover Norquist.
Given the gravity of America's economic crisis, some economists in good standing with conservatives are challenging whether the limits imposed by the ATR pledge still make sense. Three think tanks are also engaged in the discussion but will not go on the record. At issue is whether some tax breaks distort markets and harm growth. Big tax breaks can be just as much a symptom of big government as big spending, they say. If so, the argument runs, why should lawmakers who oppose excessive government spending be bound by a pledge to protect harmful or excessive tax expenditures, especially if axing them enables Congress to reduce the deficit, lower overall tax rates for individuals and corporations, and promote growth?