There’s a good chance the supercommittee on budget deficit reduction will fail to come up with an agreement by its Nov. 23 deadline. Such a failure could affect everything from the 2012 election to financial markets on Wall Street.
Here’s how The Hill
sees things shaking out in several different areas if the supercommittee is indeed unable to come up with an accord.
2012 Congressional Elections
Obviously each party will try to blame the other for failure. Democrats would be free to run on a platform of protecting entitlements. And Republicans would be free to run on a message of standing firm against tax hikes.
President Barack Obama’s Future
Republicans charge Obama with hoping for failure so that he can run against Congress in next year’s election. “I’m afraid this president is running for re-election, not really trying to solve the problem, and he wants to run against a do-nothing Congress,” Sen. Ron Johnson, R-Wis., told The Hill. “The last thing he wants to see is the Congress [doing] something.”
White House officials dispute that, but Obama has rebounded in the polls during his assault on Republicans for their opposition to his jobs bill. Of course failure could bounce back to hurt the president anyway, especially if it hurts the economy.
Wall Street and the Economy
Some financial experts say failure by the supercommittee could lead to another downgrade for the nation’s credit rating and send stocks tumbling. Merrill Lynch analysts said last month that they anticipate “at least one credit downgrade in late November or early December when the supercommittee crashes.”
But not everyone agrees. Chad Stone, chief economist for the liberal Center on Budget and Policy Priorities, told The Hill last month: “The idea that the financial markets will go into terrible panic if the committee doesn’t come up with a plan . . . doesn’t strike us as that credible.”
If the supercommittee fails, the “automatic” spending cuts that are supposed to ensue wouldn’t begin until 2013, giving lobbyists plenty of time to work their magic – and earn a lot of money.
The Pentagon, defense contractors, liberal activists and labor unions would likely jump into action to limit the spending cuts for their constituencies.
Failure is unlikely to hurt members facing re-election campaigns next year, as it’s not an issue that turns into an easy campaign slogan.
But members who seek to climb the leadership ladders in their party may suffer. That includes Sens. Pat Toomey, R-Pa., and Rob Portman, R-Ohio, and Reps. Jim Clyburn, D-S.C., Xavier Becerra, D-Calif., and Chris Van Hollen, D-Md.
To be sure, failure may help their leadership goals more than hamper them. “In terms of advancing in your party structure, it might actually be better to fail than to advocate something the party had to swallow as a bitter pill,” a Republican senator told The Hill.
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