The best thing — maybe the only good thing — about the debt-ceiling deal that Congress was expected to approve is that it would avert a technical default by the U.S. government on its financial obligations.
It does Congress no credit that it let the country get that close to the deadline, and President Barack Obama did his Democratic allies in Congress no favors negotiating over their leaders with House Speaker John Boehner on a “grand bargain” that would have combined $3 billion in budget cuts over the next decade with $1 trillion in new tax revenues.
Boehner was unable to sell that deal to fellow Republicans. Later, he embarrassingly was forced to yank his own bill to increase the debt limit when he was unable to round up the votes for passage.
It was a good time for the House Republicans’ Tea Party-movement wing. These lawmakers got most of what they wanted; the spending cuts weren’t as deep as they would have liked and they only got a commitment from the Senate to vote on a balanced-budget amendment, but not to enact it. As before, the amendment will certainly pass the House; it will almost surely fail in the Senate.
The Tea Party adherents’ tactics — basically, “rule or ruin” — may come back to haunt them. Even the most hardened Tea Partiers have spending programs they’d like to protect.
Obama and the Democrats did emerge with one potentially significant concession: The deal pushes the need for another increase in the debt ceiling off until after the presidential election next year.
What will come up right around the election is whether to renew the George W. Bush tax cuts. Last fall, Obama tried and failed to end the cuts for the wealthiest taxpayers. He can argue that in the new spirit of deficit reductions that spending cuts must be matched with revenue increases. As either safely returned to a second term as president or a lame duck, Obama will have a certain political invulnerability if he chooses, as he should, to fight that particular battle.
The tradeoff for increasing the debt ceiling comes in two stages. The first is an initial $917 billion cut over 10 years in all domestic discretionary spending programs — basically, all government agencies, including a third of that from the Pentagon. If we’re still engaged in one or more wars, we will presumably keep on fighting, just not as hard.
The remainder of the $2.4 trillion in spending cuts is to be decided by a “supercommittee” of 12 lawmakers, with the House and Senate Democratic and Republican leaders choosing three members each. That panel could save itself a lot of time by dusting off last fall’s very thorough and very thoroughly overlooked copy of the Bowles-Simpson recommendations of deficit reduction.
If the supercommittee can’t agree or either chamber rejects its proposed cuts, then an across-the-board spending cut of $1.2 trillion would start going into effect in 2013. Such blanket cuts — often proposed, but rarely enacted — are more butchery than budgeting.