It may seem as if failure of the Joint Select Committee on Deficit Reduction to submit a proposal to reduce the federal deficit isn't too unsettling; after all, there are $1.2 trillion in "automatic" cuts to fall back on.
But the spending cuts to be triggered automatically by that failure wouldn't begin until 2013 - if at all. What's more troubling is those reductions are to be spread out over 10 years. If enacted all at once instead, there's a chance the federal budget for this fiscal year would be balanced.
Thus, a deficit committee agreement wouldn't have suspend arguments over spending and taxation for the next 10 years.
The committee was borne of a deal reached last August to raise the debt ceiling and reduce federal spending. In the wake of that agreement, the Congressional Budget Office reduced its projected cumulative deficits over the next 10 years from $6.7 trillion to $3.5 trillion. Still, subtract the $1.2 trillion reduction due to "sequestration" and the national debt still would top $17 trillion. And that's assuming strong economic growth.
This means a super committee deal would have been the first of more to come if budget deficits are to be tamed. That's why the inability to reach an agreement does not bode well.
What this shows is that without a debt limit looming, Congress isn't likely to reach a deal to reduce the deficit. Eventually, we hope, the debt ceiling must be just that - a cap which limits spending to available revenues.
Realistically, as the deficit committee's deadline looms, that eventuality seems more distant.