Perhaps this is just semantics, but I’ve seen several reports on the debt-ceiling framework describe it as a “compromise” between Republicans and Democrats. That’s far too generous a term. Is this a deal? Sure. Is it an agreement? Absolutely. Can it fairly be characterized as a “compromise”? Not at all.
Republicans threatened to crash the economy, on purpose, unless a series of radical demands were met. Democrats made an effort to lessen those demands and make them less painful than intended. The result, not surprisingly, is rather ugly, which is to be expected.
The debt-reduction framework isn’t a compromise; it’s a ransom. If one were to draw up two lists — one with all the concessions Democrats made, the other with the concessions the GOP made — the one-sided image would be striking. Of course, that’s what happens when one party has a gun to the head of its hostage — in this case, the nation and its economy — and the other party wants to prevent their rivals from pulling the trigger.
According to officials in both parties, the deal would raise the debt limit in two stages. The first increase would total $900 billion, with the Treasury gaining access to $400 billion in additional borrowing authority immediately. The other $500 billion would come later this fall — unless two-thirds of the members of both chambers of Congress objected — permitting the TreasÂury to pay the bills through early next year.
The second increase would raise the debt limit by at least $1.2 trillion, also subject to a resolution of congressional disapproval. That process would place the entire burden for a debt-limit increase on the White House, because Congress is likely to vote to disapprove the request, forcing Obama to veto it. But the process virtually guarantees that the debt limit will rise, because Republicans lack the votes in the Senate to override Obama’s veto.
The agreement would also cut agency spending by roughly $900 billion over the next decade and create a new legislative committee to come up with at least $1.2 trillion in additional savings by the end of this year.
To clarify an important point, the debt ceiling increases that cover us through the end of next year will occur in phases, but there will only be one vote.
As for the bipartisan panel — some have been calling it a “Super Congress” — its members will be tasked with tackling tax and entitlement “reform,” with the goal of saving $1.2 trillion. Democrats will fight to ensure some of that total includes new revenue; Republicans will fight for the opposite.
If this commission fails to reach an agreement, a “trigger” kicks in: across-the-board cuts. The idea is to create an incentive for lawmakers on the bipartisan panel to succeed, since they won’t like the triggered consequences. In this case, half of the cuts would come from defense (presumably a goal Republicans would want to avoid), while the other half would come from domestic spending (which Dems would want to prevent).
If you’re looking for good news in this agreement, you’ll be looking for a long time. Overall, what we’re left with is bad news and less-bad news.
And what’s the less-bad news? There are a few noteworthy angles: (1) if the trigger kicks in, Medicaid and Social Security would be walled off and protected, and while the domestic cuts could affect Medicare, the cuts would be limited to Medicare providers, not beneficiaries; (2) triggered cuts for the 2012 fiscal year are practically non-existent, so it won’t hurt the economy in the short term; (3) a surprising amount of the overall deal targets the bloated Pentagon budget, which makes more painful domestic cuts less necessary; (4) there won’t be another debt-ceiling fight until 2013, giving the GOP one fewer hostages to grab for a while*.
And (5) if the deal passes, there will be no calamity this week, and everyone lives to fight another day.
Still, I know this gets repetitious, but I’m inclined to say it anyway: there’s nothing in this deal to promote economic growth and nothing to create jobs. We’re still stuck in the wrong conversation, focusing on a crisis that doesn’t exist, and ignoring the immediate crisis that confronts the nation. Indeed, all available evidence suggests the agreement will make the economy and job losses worse, not better. That Republicans wanted to take a huge step backwards, and Democrats negotiated to make it a more modest step backwards, is cold comfort.
The Senate is likely to vote on the deal as early as this afternoon, and passage appears likely. The House vote may come tonight, and the outcome in the lower chamber is very much in doubt.
* edited slightly for clarity
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