As of noon today, the long battle over the debt ceiling is at an end (at least for now). The bill passed the House of Representatives by a 269-161 margin yesterday, and cleared the Senate by a 74-26 vote earlier today. From what you’ve probably heard from the avalanche of news about this deal, it won’t include tax increases, will raise the debt ceiling by roughly $2.4 trillion (ensuring we won’t deal with it until after the 2012 elections), and will cut that amount in taxes. At face value, you’d think this is a good deal?
Ah, but that is where they get you with the details. The cuts will be spread out over ten years, which theoretically would mean that we’d be shaving $240 billion off the deficit each year, all things being equal. However, not even that will occur, because when Washington “cuts” spending, they really mean that they’re going to slow the rate of growth in spending projected by the CBO, and calling the difference between the baseline and the spending pattern a “cut”. So in other words, rather than cut spending, spending will increase, just more slowly.
As expected, each party’s leaders are putting their own spin on the deal. House Speaker Boehner (R-Ohio) is trying to tell his caucus that the bill is a victory for Republicans because it doesn’t include tax increases, while House Minority Leader Nancy Pelosi (D-California) tells her caucus that it could’ve been worse, but it gets the job done.
In reality, nobody really won, because there isn’t anything in the compromise that is a cause for celebration. The debt ceiling is still being raised, so we’ve found more road to kick the can down, which means more room for spending. Also, a “Super Congress” was formed, which, as I mentioned in a post from last week, represents nothing more than legislators handing over their power to tax-and-spend to a small group of their peers, which could yield no actual solutions to the problem of debt and deficit. Yes, they’re being forced to act because of a spending-cut heavy “trigger” that would axe huge portions of entitlement and defense spending, which seems like the best way to actually cut spending right now rather than whatever smoke-and-mirrors tactics this deal is promoting.