Thread: The Debt Ceiling Deal From Hell

The Debt Ceiling Deal From Hell



August 3rd, 2011
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Is the debt ceiling deal supposed to be some sort of a cruel joke? Is this what the American people have been waiting months and months for? The "debt ceiling deal from hell" is a complete and total fraud. Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no "real" spending cuts will happen until after the 2012 election. The way the political game in Washington D.C. is played today, if you don't get something right now, you probably will never end up getting it. The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future. Meanwhile, this deal establishes a new "Super Congress" that threatens to fundamentally alter our political system (and not in a good way). The funny thing is that everyone is running around proclaiming that the Tea Party won this battle. That is a complete and total lie.

So what about the $917 billion in "immediate" spending cuts that the Republicans are getting as part of this deal?

Well, they aren't really spending cuts at all. Rather, they are spending caps. Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as "spending cuts".

What is even sadder is that the $917 billion is spread over ten years and the vast majority of the "cuts" are in the latter years.

For example, even if you consider these to be "spending cuts" (which they are not), the deal calls for only about $25 billion in "cuts" in 2012 and only about $47 billion in "cuts" in 2013.

25 billion dollars is far less than one percent of the federal budget, so needless to say these "cuts" are not very impressive at all.

Okay, so how about the second stage of the deal which will produce "spending cuts" of between 1.2 and 1.5 trillion dollars?

Well, yes, these would actually be spending cuts and they would be spread over 10 years.

Near the end of the year, the new "Super Congress" (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.

If the recommendations of the "Super Congress" are not implemented, then "automatic" spending cuts of $1.2 trillion will go into effect over the next 10 years.

However, there are some very important things to remember about these "spending cuts".

First of all, none of these "automatic" spending cuts would even go into effect until 2013. The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.

As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason....

By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.â€