Ryam Grimm has a great piece noting that the large cuts scheduled to take place “automatically” if the supercommittee deadlocks won’t necessarily take place. After all, as Grimm points out lots of other stuff is scheduled to happen “automatically” on January 1, 2013. That includes expiration of the Bush tax cuts — both the portions whose extension President Obama supports and the portions whose extension he opposes — plus a whole suite of other tax credits for energy production, R&D;, etc. that congress routinely extends.
What’s really going to happen is that in early November we’re going to have an election, and then in December the lame duck Congress is going to try to work out a deal. A lot of different scenarios are possible. The only one that’s predictable is that since Democrats respond to electoral defeats by caving, if the GOP wins big the lame duck congress will basically do whatever president-elect Romney wants them to do. Full extension of tax cuts, plus something or other on the spending side. The GOP didn’t respond to electoral defeat in 2008 by caving, so it’s difficult to see why they would do so in 2012. In that case, it’s at least possible that we’ll have super-deadlock, all the cuts will take place and none of the tax cuts will be extended. In public policy terms, I think that’s a decent outcome and it’s what will happen if everyone follows through on their stated unwillingness to cave, but I sort of have my doubts that it will come to pass.