A deal only a politician could love
By Norman Leahy | Monday, August 1st, 2011 | Policy, PoliticsThe news readers on the financial networks this morning were almost giddy. The political class has reached a debt ceiling deal! The futures are up! Now we can get back to the serious business of letting fund managers talk their books!
This mindless cheerleading will go on for most of the day, or at least until the closing bell. But for those of us who look upon almost anything that oozes out of DC with contempt, there are a few hard facts to know about this “deal.” Fortunately, Cato’s Chris Edwards, again, does the dirty but essential work:
Spending isn’t being cut at all. The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.
No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.
The federal government will still run a deficit of $1 trillion next year. This deal will “cut” the 2012 budget of $3.6 trillion by just $22 billion, or less than 1 percent.
There are those, including many folks I respect, who will call even such lilliputian cuts as these a victory. And they have something of a point: for the last decade, the political class has cut nothing, so even the most modest of cuts, even if they are chained to the ever-rising baseline budget, are at least rhetorically significant. And even more, these pin-pricks have been achieved despite a Democrat-controlled Senate and a Democratic President, both of which were counting on, and campaigning for, higher taxes as part of any deal.
Fair enough.
But there’s an old, colorful saying: “Don’t piss on my boots and tell me it’s raining.” This deal is not a solution. Entitlements, war spending, even grants for cowboy poets…they will continue unabated. And far sooner than almost anyone is willing to admit, the bills will come due and the shambling fiscal wreck that is the United States will find itself unable to pay.
Over the weekend on “The Score” radio show, Jim Bacon and I discussed the debt ceiling follies and what might really be required to set the nation on a sound fiscal course. You can listen to that wonky goodness here.
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About the author
Norm Leahy has written about Virginia and national politics online since 2002, beginning with One Man's Trash (OMT), and continuing through Bacon's Rebellion (both the blog and the e-zine), Sic Semper Tyrannis, NBC12's Decision Virginia, Richmond.com and Tertium Quids. He is the chief blogger at "The Score" and a producer of "The Score" radio show as well as being a Washington Post contributor.
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6 Responses to "A deal only a politician could love"
Norm says,”his mindless cheerleading will go on for most of the day, or at least until the closing bell.”
Actually not, they are bailing out ahead of time. I guess the old PR game is losing its bite. About the best that can be said is that no one is saying that this is 1995 redux for the Repubs. A second mild benefit is that Obama is locked into running from the left for 2012. He has to advocate raising income and healthcare taxes no matter how bad the economy. Otherwise, it changes almost nothing except for some mild atmospherics. As you note this is something to be pleased about for a day. In the real world its effect is zilch. On with the spending, the debt and the depression. Pray that the 2010 election is only an appetizer for 2012.
Well, I have posted harsh criticism of the republicans over their position on many issues, but I think we should all give credit when it is due. If and when this bill is passed, I think it will be acknowledging that while imperfect, it will do much less harm than the alternative; that is, default, recession, and harsh unemployment. That said, the second round will be critical, especially for us here in Virginia. If the Congress does not approve the Congressional Commission’s work, then cuts in defense spending and Medicare of $350 B each go into effect immediately. Therefore, the pressure will be on to find a combination of cuts and tax reform that will be able to pass Congress. That vote will be critical for all of us, but the process seems likely to ensure that the tea party tactic of taking the nation hostage will have evaporated, for if they block a rational solution like the ones proposed by the Gang of Six, the Simpson-Bowles commission, or the Alice Rivlin commssion, then they will be the cause of severe and immediate unprecendented cuts that will really hurt. Frankly, I think that possibility pleases regular republicans as much as it pleases democrats.
I support this deal, as I wrote in a separate post. Note, however, that I have never referred to this deal as “a solution.”
A true solution would require real cuts of a much larger magnitude and a Balanced Budget Amendment (and probably also a Congressional Term Limits Amendment). But we currently have a president and Senate that are categorically opposed to making meaningful cuts and who, if they could have their way, would choose to rack up trillions of dollars of additional debt as quickly as possible.
Given this reality, I consider it a huge victory that the Republicans managed to control the debate and win $3 trillion in cuts (albeit based on baseline budgeting), no new taxes, and a vote on a BBA. This was the best deal possible given a Senate and President who wanted to continue going in the opposite direction.
The real test of conservatives’ political will to take the actions necessary to save the country from the leftist Democrats’ reckless spending will come after we win the presidency and the Senate in 2012.
Mike, are you saying your sorry for all of that “harsh criticism” of those Republicans?
If you didn’t look at everything coming out of DC with contempt, you might live a better life. Of course the CATO Institute is, well, based in DC. I guess that’s why you said almost anything; or maybe it was your verbage ooze.
I realize there are differing opinions at Bearing Drift; however, the title of the article before this was one “Debt ceiling deal is a resounding defeat for Obama Democrats and a huge victory for Republicans and America” – how do you all justify those differences?
“verbage ooze”… sounds like you should have that looked at under your Gmn’t health care plan while you are in line to pick up your cheese and checks.
And you want someone here to explain the “differences” between two different posters about two different topics? You are still free to start your own blog and misspell, rant, rave, blame, be stupid and collect like-minded posters who all say the same thing. Let us know when it is up and I will come over and comment and I promise I won’t use any bad names or ask questions about issues you may have had in your early childhood.
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