Winners and Losers of the Deficit Supercommittee Deadlock

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Jim Lo Scalzo / EPA

Democratic Senate Majority Leader from Nevada Harry Reid talks to reporters about Supercommittee negotiations after the Democrat's weekly leadership lunch in Washington, Nov. 8, 2011.

With the deficit supercommittee charged with finding $1.2 trillion in savings teetering on the brink of failure, Washington is embroiled in a high stakes round of recriminations. Depending on whom you listen to, everyone’s to blame and everyone’s blameless. Three months closer to an election year, Congress is proving every bit as dysfunctional as it was during the debt ceiling deal that created the supercommittee in August, and looming primaries – both presidential and congressional – have put bipartisan compromise even farther out of reach. Really, there should be no shock that the committee has failed – there were too many people who stood to benefit from its demise.

(MORE: In a Tea Party Universe, Visions of Supercommittee Success)

Congressional incumbents: If you’re, say, Senator Jon Tester, a Montana Democrat who has a tough reelection test ahead of him next November, what incentive would you have to vote for entitlement cuts, which would risk the support Native American tribes, seniors, lower income voters – the trifecta of constituents that are pivotal to winning statewide in Montana. On the flip side, if you’re, say, Rep. Paul Gosar, an Arizona Republican freshman of the Tea Party persuasion, voting for increased revenue could leave you open not just to a primary challenge, but also vulnerable to a conservative Democrat in the general election. Ultimately, the political calculus was against any deal, and any member of Congress facing a close race can breathe a sigh of relief now that the supercommittee has deadlocked.

Congressional challengers: That said, new candidates for office have also been given a gift. Congress’s approval rating is near record lows and the supercommittee’s failure only serves to underline the hamstrung legislative process and the fact that those in office right now probably aren’t the ones who are going to fix it.

Democrats: As I noted the day after the debt ceiling agreement, that deal wasn’t terrible for Democrats. Not only did they settle the 2012 budget with just $7 billion in non-defense discretionary cuts, but the likelihood of a supercommittee deadlock all but assured that Congress would pass tax reform in late 2012 or at the beginning of 2013. Democrats have long sought to raise revenue through tax reform without having to cut entitlement benefits, and now they will likely get their wish. The consequence of the supercommittee’s failure is that $1.2 trillion in cuts will automatically happen in January 2013, not coincidentally at the same time George W. Bush’s tax cuts expire. Those two events will create powerful incentives for tax reform.

(MORE: Amid Supercommittee Wranlging, Tax Reform Gains Momentum)

President Obama: On his tour of Asia, Obama wisely stayed about as far away as he could get from the supercommittee train wreck. After getting burned by being too close to the debt ceiling negotiations, Obama learned his lesson and let Congress embarrass itself. The supercommittee’s failure to reach an agreement only helps his strategy of running against Congress, as Harry Truman did in 1948. Now, he can spend the next year blaming congressional dysfunction for the country’s woes.

Americans for Tax Reform’s Grover Norquist: The deadlock proves his power to hold GOP politicians to his anti-tax pledge is as potent as ever. For all the stories about how Norquist was done and how lawmakers were finding ways around it, Republicans’ fear of raising new revenue and crossing Norquist was one of the biggest contributing factors to the committee’s failure.

(MORE: When Grover Norquist Says ‘Jump’…)

Still, the supercommittee’s impending failure will not be without its casualties.

House freshmen: Whether this debacle was their fault or not, the new, largely Republicans class elected in 2010 has come to represent the congressional logjam and they are suffering for it. They are already running into fundraising trouble and House Democrats outraised their GOP counterparts nearly two-to-one last month. Passing a bipartisan deal that satisfied the markets and reduced the deficit could’ve done wonders to reform their obstructionist image. Alas, it was not to be. So, while running for reelection having raised taxes would’ve been hard, this group is doubly screwed as they also bear the blunt of the blame for the sorry state of affairs.

The American people: Deficits remain a great threat to national security, as Mike Mullen, former chairman of the Joint Chiefs of Staff, once put it. The committee’s failure risks a stock market dive amid a widening European crisis and another potential downgrade of America’s bond rating status. Small business lending could get tougher because of this debacle, the recession could drag out and unemployment could continue to stagnate. There are probably a dozen more winners and losers that I could name on the political spectrum. But the fact of the matter is, whatever short-term political gains anyone gets out of this, in the long run the American people lose.

(MORE: The Generational Divide That Will Define 2012)

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