The failure of the supercommittee to agree on the distribution of US budget cut is not much of a news. It has been expected. Leaks of how difficult it was to reach a common ground made it way to news reports .
More importantly, the impact of the failure is not too big because the fail-safe automatic cut is going to happen anyway. Both the unsurprising result and the minimal impact of the failure are signified through the low level of attention given by the media on the issue. Focus on the failure is not nearly as intense as focus on the earlier downgrade of US debt by S&P’s.
In retrospect, the fail-safe mechanism is a brilliant political maneuver. It was a result of uneven bargaining where deficit hawks, perhaps irresponsibly, held the US government at random and squeezed as much juice as possible out of the situation. Default or cut it. It was a Hobson’s choice: default was out of the question. And now here we are with the fail-safe mechanism.
While the fail-safe mechanism now ensures the implementation of the USD1.2 trillion budget cut over the next 10 years, it may have also contributed to the failure of compromise. If the members of the supercommittee — whom belongs to competing political parties and we know they serve their political bias — know the cut is going to happen anyway with its distribution already apportioned, why compromise when a compromise angers your voters base?
In a way, the supercommittee is really a lame duck committee. No incentive to action with every incentive to do nothing.
