Politico: Making book on the supercommittee
What the congressional supercommittee does about cutting the nation’s deficit in the next few days could determine the economy’s course next year and conceivably long after that.
Despite its looming deadline, the committee could still take numerous paths that would lead to substantially different economic and fiscal outcomes. Let’s consider some:
Gimmicky deal — 10 percent probability: On the darkest path, the committee relies on budget gimmicks — like an assumed winding down of the Iraq and Afghanistan wars — to achieve its $1.2 trillion goal in 10-year deficit reduction. The panel could then avoid substantive government spending cuts similar in size to those that would automatically occur beginning in 2013.
Using gimmickry would signal financial markets that it is hopeless to believe Washington can address the nation’s long-term fiscal problems.
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