The Smart Money Says Deadlock

The Smart Money Says Deadlock

In politics, the smart money is always cynical. It bets on inertia, not change; on symbols, not substance. Hope? Progress? Suckers' bets.

The smart money isn't always right, but when it comes to the so-called supercommittee, it's made a safe bet. With a week to go, the panel seems unlikely to reach any sort of deal. But it's even more unlikely to reach a meaningful one.

It never ceases to amaze me how much faith people put in these special panels/commissions/committees/conclaves. Credulous optimists routinely cite a variety of successful precedents, notably the Greenspan Social Security commission of the early 1980s.

But the track record for special budget commissions is not actually encouraging. As reporter Catherine Rampell pointed out in the New York Times back in August:

    In the last six decades, Washington has assembled more than a dozen blue-ribbon panels to grapple with fiscal problems. These include the 1947-49 Hoover Commission, the 1982-84 Grace Commission and of course most recently, the Simpson-Bowles Commission, a bipartisan panel President Obama created by executive order just last year that included 12 sitting members of Congress ...The panels were often devised as a way to give political cover to policy makers so they could make unpopular changes to things like entitlements and tax rates. In most cases, though, Congress ignored the proposals or deferred action.


Even the Greenspan panel was largely unsuccessful. Poised for failure, it was rescued only by the intervention of non-panelists, including President Ronald Reagan and Democratic leaders of the House of Representatives.

Why do supercommittees fail? The explanation begins with Thorndike's First Law of fiscal politics: There is no such thing as political cover....

 

 

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View TaxAnalysts' Joseph J. Thorndike's opinion in its entirety on TAX.com.

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