Ezra Klein thinks it will. I'm not so sure, but his reasoning is impeccable.
The supercommittee was widely expected to extend the payroll tax cut and the expanded unemployment benefits. Those policies alone are expected to add 1-2 percentage points to growth next year. Some of the proposed deals included further stimulus measures like increased infrastructure spending, which would have given the economy a further boost. There was also talk of patching Medicare's payments to doctors and the Alternative Minimum Tax, neither of which is specifically a stimulus measure, but both of which would hurt the economy if allowed to expire now.
The supercommittee's failure throws those deals into doubt. Many Republicans are balking at extending the payroll tax cut altogether. Sen. Jeff Sessions, for instance, "said he was uneasy about extending the payroll tax holiday, calling the national debt 'a greater threat to us' than the weak economy." (Think he'll insist any extension of the Bush tax cuts is fully paid for?). Other Republicans are hoping to tie unemployment insurance and the payroll tax cut to a bill lifting the defense cuts in the trigger -- a strategy that might lead to a wholly different kind of showdown. Either way, the passage of these items is now in doubt, and that means the growth picture for next year is dimming.
If growth falls by 1-2 percentage points next year, that could well mean we're only growing by one percent or so. If events in Europe take a turn for the worse, it could mean we're back in recession. That, and not our deficit, is the immediate threat. And it's one the supercommittee made worse. ...Wonkbook, WaPo
In case you need a reminder of just how ridiculous Republicans have become, Klein offers several. One comes from a report the other day of a Republican offer to raise taxes in return for $316 billion in cuts. What tax and how much? Oh, right. Three whole billion -- $3 billion! -- in taxes on corporate jets. Wowee!
Klein also quotes from business writer Charlotte Rampell in the Times:
Republicans on the deficit-reduction supercommittee have offered a deal with 24 cents of every dollar in savings coming from tax increases, and the other 76 cents from spending cuts...In the five fiscal grand bargains of the 1980s and early 1990s, tax increases accounted for an average of 61 cents of every dollar saved. In fact, in President Reagan’s 1982 and 1984 budget-trimming deals, more than 80 percent of deficit reductions came from tax increases. What’s more, the deals passed with majority support from both parties. Mr. Reagan may be remembered as an antitax hero, but he actually raised taxes 11 times over the course of his presidency, all in the name of fiscal responsibility. ...NYT
Rampell also reminds us (and there's an election coming up) that "three-quarters of Americans — including more than half of Republicans — say they believe that any deficit reduction plan should include tax increases, according to a recent New York Times/CBS poll."
