The agreement looks like this: if the super-committee tasked with entitlement and tax reform fails to come up with $1.5 trillion in deficit reduction that passes Congress, the “neutron bomb” goes off, -- as one Democrat put it -- spending cuts that will hit the Pentagon budget most deeply, as well as Medicare providers (not beneficiaries) and other programs.
If the super-committee comes up with some deficit reduction but not $1.5 trillion, the triggers would make up the difference.
So it’s a minimum $2.7 trillion deficit reduction deal.
And the debt ceiling will be raised by $2.4 trillion in two tranches: $900 billion immediately, and the debt ceiling will be raised by an additional $1.5 trillion next year – either through passage of a Balanced Budget Amendment, which is unlikely, or with Congress voting its disapproval..
So we're looking at around a $2.7T deficit reduction plan, still short of the $4T suggested cut to avoid a downgrade. BTW, any coincidence that S&P suggested this amount, which happens to be about as much as what Obama's policies have cost us over the past two-and-a-half years?! The overspending of the last administration and the excessively higher spending of the current have inevitably set us on a path towards guaranteed downgrade. But I digress...
Throughout the afternoon and into the evening their were a couple of points to still be negotiated, primarily the ratio of Defense to discretionary cuts (Dems want 50%, Repubs want less). But also, some Democrats were dissatisfied by tax revenues being substituted with Defense cuts (umm, they can get over it); however, there still may be a way for these obsessive hikes to be achieved either in the deficit commission (which Erick Erickson believes to be the case) or if Obama scraps the extension of the Bush tax cuts in 2012 (which could be just as likely, although electorally risky). There are still Democrats who espouse that taxes are still on the table, so pray that there's no RINOs on the committee who'd cave to the notion of hikes, particularly as we're brought to the verge of another recession (as if the American People have felt the last one yet subside).
By the evening, it appeared that Democrat and Republican leaders of both houses, along with President Obama, signed off on a deal. As earlier suspected, it seems that the decision for "total reductions would be equally split between defense and non-defense programs. Across-the-board cuts would also apply to Medicare. Other programs, including Social Security, Medicaid, veterans, and civil & military pay, would be exempt," and apparently, Boehner signed off on the 50/50 split when it was determined that the "compromise on defense was to include foreign aid, Homeland Sec., etc. in “security” category of cuts so they didn’t fall so heavily on DOD."
Timothy Carney's Washington Examiner piece gives an interesting take on the weekend tranche:
As the debt-ceiling debate wrapped up over the weekend, Democrats once again gave Republicans what they wanted on substance, in exchange for Republicans giving Democrats what they wanted on politics.
Abandoned in the debt deal are the liberal ideal of "shared sacrifice" (i.e., tax increases) and the Keynesian tenet of government spending surges during recessions. Preserved is the political framing that helps the Democrats in the 2012 election: no more embarrassing debt-limit votes before the election, no prominent debate on a balanced budget amendment, and a stage set for some good old corporate-jets-vs.-Medicare demagoguery.
Details of the debt deal were still being finalized as this column went to press, but it appears that the White House and Senate Democrats have agreed to up to $3 trillion in spending cuts with possibly no tax increases. On substantive grounds this is a complete Democratic surrender.
Democrat surrender? Not exactly. Pardon my skepticism, but I don't hold anything, ANYTHING, past the Democrat's promise of 'possibly no tax increases', nor of following through on real debt reduction (what tiny bit is actually here). But let's get through Carney's piece before I elaborate...
Consider Obama's willingness in April to compromise on taxes and most spending, but to stand firm on Planned Parenthood subsidies. It looks like liberal principles took a back seat to 2012 fundraising. And this debt deal is similarly Machiavellian: Substance was subjugated to political framing. Republicans had their demands: no tax increases, yes spending cuts. Democrats' demands had a different tone.
First, Democrats wanted to ensure this was the last debt-limit increase before the 2012 elections. Raising the debt limit, as Sen. Obama said in 2006, is "a sign of leadership failure" and politically unpopular. Second, they wanted to ensure that the right issues would be debated in the election year. A high-stakes debate over a balanced budget amendment -- as required by the bill the House passed on Friday -- would make it clear that Democrats, unlike most Americans, do not want a balanced budget.
Instead, the "trigger" in the new compromise bill sets up a debate that Obama can easily cast as a fight between cutting Medicare and raising taxes on Big Oil, corporate jet owners and the richest one percent. If raising taxes on these politically disfavored classes was really the Democrats' priority, they could have done it already -- either before the 2010 elections or by driving a harder bargain in the last three budget battles. But instead, their priority is debating these targeted tax increases and pretending they will save Medicare from insolvency.
Democrats' willingness to compromise doesn't reflect superior maturity to the more rigid Republicans. Quite the contrary: It reflects caring less about policy than about politics.
All interesting points, particularly when dealing with a president whose priorities lie within his own reelection. But in the end, does the deal being brokered measure up to real solutions, as Marco Rubio spoke of in his impassioned speech on the Senate floor? Although we're told that nearly $3T is being reduced over the next 10 years, growth in the national debt due to baseline budgeting will continue to grow in excess of around $7T. So instead of running towards debt, we're now briskly walking? And that's acceptable at a time when we should be reducing spending? Oh, and for the final kick in the pants, it's probably important to note that following this battle, however it may end up in the next few days, the CR that was voted on in April, instead of a real budget, ends in September. Oh, happy days...
