WASHINGTON — Democrats argued vigorously Wednesday on Capitol Hill that government programs are needed desperately to help get people back to work. Republicans fought just as hard for big spending cuts and low taxes.
As a result, the bipartisan congressional "supercommittee" that's struggling to find at least $1.2 trillion in deficit savings by Nov. 23 offered little evidence of consensus.
"We're working on it," said Rep. Chris Van Hollen, D-Md., one of the 12 members from the Senate and House of Representatives who are trying to devise a debt-reduction plan. If no plan is adopted, about $1 trillion in automatic spending cuts — half from defense, half from domestic programs — would be triggered over nine years, starting in 2013.
Wednesday's two-hour meeting, the panel's first public session in more than a month, had one witness: Douglas Elmendorf, the director of the nonpartisan Congressional Budget Office.
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The automatic cuts, he said, would mean that defense spending — excluding war-related funding — would be 16 percent less by 2021 than it would be if it kept pace with inflation. Non-defense domestic discretionary spending would be 15 percent lower.
The hearing consisted largely of committee members trying to get Elmendorf, the Capitol's leading budget expert, to bolster their partisan theories. Republicans were eager to show that entitlements such as Medicare must be restrained dramatically, a position that Democrats are reluctant to embrace.
If spending for such programs increases substantially, as expected, little will be left for discretionary spending, said House Ways and Means Committee Chairman Dave Camp, R-Mich. Discretionary spending includes popular education, transportation, energy and other programs.
In fact, Camp argued, discretionary spending could become a tiny percentage of the nation's gross domestic product, well below last year's 9.3 percent. That figure is the highest since 1988, largely because of the 2009 economic stimulus.
Has a level as low as 1 percent ever occurred "in recent history?" Camp asked.
"Well," Elmendorf said, "I don't know about the 18th century."
"Could we operate a functioning government" at that level? Camp asked.
"Nothing like the government that we are now accustomed to, on either defense or non-defense programs," Elmendorf said.
Committee Democrats have been discussing a plan that would shave $3 trillion from future deficits, including hundreds of billions of dollars of cuts in health programs — along with significant new taxes. They maintained Wednesday that discretionary spending is often necessary to revive a sluggish economy.
"It would seem to me that we need to start looking at, how do you prepare people to assume taxpaying responsibilities in our society?" asked Rep. Jim Clyburn, D-S.C. "We do that by investing in their education."
He then listed a series of government programs that could help.
"Am I to believe that if we dramatically reduce that investment, then we will dramatically reduce people's abilities to assume these responsibilities and to become taxpayers?" Clyburn asked.
Elmendorf told him "you're raising difficult but important questions." And, he said, "there isn't a good general answer."
Partisan point-making continued throughout the hearing.
There's been private talk about a deal that would lower corporate tax rates — a Republican favorite — but also close corporate tax loopholes, which would please many Democrats. But Democrats also want higher taxes on the wealthy, while Republicans want lower tax rates for everyone.
Would a broad tax-code overhaul that lowered individual rates but "would have the effect of broadening the base on which taxes are applied" generate more government revenue? asked Sen. Patrick Toomey, R-Pa.
Yes, Elmendorf said, but "the amount would depend on the specifics of the proposal."
Sen. Patty Murray, D-Wash., the committee's co-chairwoman, wanted to know whether tax increases or spending cuts have a larger impact on reducing consumer demand.
"Depends on the specific tax increase or spending cut that you have in mind," Elmendorf said. "Certain forms of government spending, we think, have a large bang for the buck in terms of demand."
Then again, he added, "Certain kinds of tax increases would restrain demand by more than other kinds of tax increases."
After the hearing, Van Hollen was asked what had been accomplished.
"People got a good understanding of what it would mean" if something's not done about the deficit, he said.
ON THE WEB
Bowles-Simpson commission report
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