Gambling on the Supercommittee? Time to place your bets…

As the 12-member, bipartisan, deficit-cutting super committee spins its wheels in search of $1.2 trillion in deficit reductions, there is a growing sense of skepticism over whether it will reach its goal. The stakes are high. As the Washington Post notes:

failure to produce a measure would trigger painful across-the-board cuts to the Pentagon budget and a big slice of domestic programs. Programs like Social Security, food stamps and the Medicaid health care program for the poor and disabled would be exempt from the automatic cuts, but farm subsidies could bear cuts and even politically popular Medicare could too, though any cuts would be limited to 2 percent of the Medicare budget. The idea behind this so-called sequester was to force the two sides to come together because the alternative is too painful.

Fortunately, nothing focuses the mind like the hangman’s noose, and so we should expect the GOP’s reluctance to raise taxes and the Democrat’s steadfast refusal to cut entitlements to dissipate as the deadline approaches.

Indeed, there is already evidence of bipartisanship is search of a serious solution.  As Anna Palmer (Politico) reports, the solution involves the legalization of online betting.

Conservative firebrand Rep. Joe Barton (R-Texas) and New England liberal Rep. Barney Frank (D-Mass.) are talking up members of the powerful deficit-slashing committee, arguing that virtual betting could boost tax revenue and even create jobs.

And the pair isn’t alone in its support of the industry. Senate Majority Leader Harry Reid (D-Nev.) tried to slip legalizing language into a must-pass tax package last year. And even supercommittee member Sen. Jon Kyl (R-Ariz.), who has opposed the idea, appears to be softening. …

“Several of us are trying to get it into the supercommittee,” Frank told POLITICO. “It would create $40 billion [in revenue] over 10 years.”

There are some interesting dimensions to this story. For example,  in what appears to be a classic case of mud farming, Kyl and Reid have been pressuring the Justice Department to pursue illegal internet gambling while collecting donations from the industry as they promote legalization. And they are not alone in extracting support from the industry.    According to Palmer, Frank and Barton have both received campaign contributions from Full Tilt Poker, a company that has been accused by the Justice Department of running “a $440 million Ponzi scheme” (the Justice Department has already charged Full Tilt and others with bank fraud, money laundering, and illegal gambling). As one might expect, Rep. Frank “has put the $18,500 he received from Full Tilt and others related to the company in trust either to reimburse people who lost money or to donate to a cause related to online gambling.” Other congressional recipients of Full Tilt money are doing similar things (for those who are interested, the Boston Globe’s coverage can be found here).

There is, unsurprisingly, a lot of money to account for. As the Las Vegas Review-Journal notes: “Executives of FullTilt and the Poker Players Alliance PAC spent more than $500,000 in federal political contributions since supportive lawmakers began efforts four years ago to legalize online gambling, according to federal records.”

Undoubtedly, this is little more than a sad little sideshow in the larger circus of government. But there is something rather ironic when, in the face of concerns over the implosion of entitlement trust funds that seem to be remarkably Pozi-like in their funding mechanisms, the best we can do is draw on a stream of revenues from online gambling. It seems equally ironic that Rep. Frank who minimized the risks of a collapsing housing bubble and proclaimed “I want to roll the dice a little bit more in this situation towards subsidized housing” once again turns to the tables for a solution.

Deficit Reduction—You  Can’t Win If You Don’t Play.

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