The debt deal: Disaster averted, decline straight ahead
The Washington Post, July 31, 2011
is what we've driven the global economy and America's credit rating to the brink for?
is why Republicans (who voted for the Paul Ryan plan that would add $5 trillion in red ink over the next decade) decided it was vital to not lift the debt ceiling to accommodate their own budget's outsized debt?
This is the best the White House could salvage after inexplicably failing to insist that the debt ceiling be raised as part of December's deal to extend the Bush tax cuts—which would have let the country avoid this unprecedented exercise in self-inflicted damage?
If you put aside the talking points both sides will peddle, the disappointing contours of the emerging endgame run as follows:
First, Washington will do nothing more to boost jobs and growth. The best that can be said is that the spending cuts will be tiny in the next two years, so the feds won't be contracting demand, save for the end of the stimulus. Our epic jobs crisis remains ignored.
Next—as to long-term deficit reduction, supposedly the reason the GOP put the country through this costly fiasco—the deal remains utterly inadequate, even if the joint congressional committee the plan would empower to address this succeeds.
Here's why. The Congressional Budget Office says Uncle Sam will spend around $46 trillion over the next 10 years. Assume the committee proposes and Congress enacts a further $1.2 trillion in deficit reduction atop the deal's $900 billion in initial cuts, and that all this is done on the spending side (though "tax reform" is supposed to be included). That means we'll have trimmed less than 6 percent from federal spending that is already slated to increase from $3.6 trillion to $5.7 trillion by 2021.
In other words, the numbers sound big and can be sold as "historic," but they're not even close to what's needed.
Sen. Lindsey Graham had it right Sunday. "It's a $3 trillion package that will allow $7 trillion to be added to the deficit over the next decade," he said, instead of $10 trillion. "We're no longer running toward oblivion, we're walking toward it."
Politically, however, it's a sufficient escape hatch. The Tea Party can claim it changed the debate. Other Republicans can say "this is the best we can do without the presidency." President Obama can tell independents he got "a major down payment on deficit reduction" while still casting the GOP as unreasonably opposed to fair tax hikes on hedge fund managers, oil companies and corporate jet owners.
And the president got the only thing that was ever nonnegotiable from his perspective: a big enough increase in the debt limit to ensure he doesn't have a repeat of this fiasco during the 2012 campaign, which would make him look fatally weak.
There's a good chance this package will pass with majority Republican support. The Tea Partyers can huff and puff and say no, because House Speaker John Boehner can still find enough Republicans who will be satisfied to "disapprove" of the debt-ceiling hikes while nonetheless voting for the package. Most Democrats will back their leaders and take credit for "slashing the deficit" while keeping Medicare and Social Security safe.
As for the infamous "trigger" meant to assure the joint committee does its work? I'm told the cuts from any sequester it imposes for failure won't take effect until January 2013—about the time the Bush tax cuts expire. So it's not clear the long-term parts of this deal will have any impact, because we'll be revisiting everything after the election, with whatever cast of characters is sent back to Sodom to do the people's business.
Taken together, then, the deal is an almost perfect blend of policy punt and political ploy. That's what passes for "accomplishment" in Washington nowadays.
The media will now parse the byzantine details and the mechanics of passage. But the depressing big picture is this: We've averted disaster only to double down on decline.
The only sane agenda—more tax cuts and spending stimulus in the near term, coupled with much more deficit reduction in the long term, triggered once unemployment is back below 6 or 7 percent—is not even on the table. Nor is there room made for needed investments in infrastructure, research and development, and a new generation of teaching talent. All because the interest groups and ideological litmus tests in both parties ban an expression of a common-sense plan for American renewal—as well as utterance of the simple truth that as the boomers age, we'll need to slow the growth of Medicare and Social Security, trim defense and raise taxes.
If you're convinced people have more appetite for these truths than our "leaders" believe, now would be a good time to sign up for Americans Elect's online nominating convention to put an independent ticket on the ballot that offers an alternative to these continuing charades.