July 31, 2011

Debt-Ceiling Deal Allegedly Reached (See Internal Update: Unacceptable)

Filed under: Economy,Taxes & Government — Tom @ 9:09 pm

For reasons explained previously, mainly that so-called spending “cuts” will only be reductions from an inflated CBO baseline, that they aren’t actual reductions in year-over-year spending, and that they are more than likely to be back-loaded with minimal immediate impact, I’m not pleased with what has transpired.

I also question the very existence of an “agreement,” given that our not-credible president is the one who has announced it in “a surprise appearance,” and may be creating artificial last-minute pressure by doing so. How many times did we hear that Boehner and Obama were “close” from the establishment press 1-2 weeks ago, when it was NEVER the case? Update, Aug. 1, 2:15 p.m.: Told ya “Speaker John Boehner (R-Ohio) will need Democratic votes to clear the bill through the lower chamber. How many remains unclear.”

Here’s the situation as explained at the USA Today blog by David Jackson:

Update at 8:40 p.m.: President Obama said tonight that he and congressional leaders have agreed to a debt ceiling deal just two days before a possible government default that would inflict major damage on the economy.

The full Senate and House must still vote on the agreement, Obama said at a surprise appearance Sunday night in the White House.

And that might not be so easy — some Democratic liberals are already protesting that the plan lacks new tax revenues, while some Republican conservatives said it creates the possibility of too many defense cuts down the line.

“This process has been messy,” Obama said. “It has taken far too long.”

The proposal calls for a two-tiered $2.4 trillion increase in the debt ceiling while cutting federal spending by more than $2 trillion over the next ten years.

If it’s really two steps (in other words, the issue won’t go away until after the presidential election, which was a major Democrat goal — Update: it’s not really two steps), that would be a good thing. If there really are no tax increases, good on that too (Democrat holdouts for tax increases — and I want their names — literally must not care about whether the economy plunges into recession). Update: There’s too much of a chance of future tax increases embedded in the commission and trigger structure.

The “cuts” from the baseline are inadequate. In theory, they’re twice what Boehner had a few days ago, but I don’t trust the representations being made about their size, their timing, or their eventuality.

As to Obama’s “far too long” comment, the guy has no right to complain about anything, given that neither he nor Harry Reid’s Senate never stepped up with a discussable program seen in the light of day long enough to be evaluated. Many on the right are criticizing John Boehner, and to an extent rightfully so, but I hope those who are aiming arrows at him will be adult enough to admit that he was the ONLY one demonstrating any leadership during the past few weeks.

I’m not really of a mind to keep up with this for the rest of the evening, because the credibility of media reports is so suspect. Commenters are welcome to chime in with what they see happening if so inclined, and I’ll try to moderate comments more quickly than usual.

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UPDATE, August 1, 1:45 p.m.: Per the CBO (go to the final page), anticipated reduced outlays amount to $21 billion and $42 billion in fiscal 2012 and fiscal 2013, respectively, or roughly 1% of anticipated outlays for those two years. That’s unacceptable.

UPDATE 2, August 1, 3:40 p.m.: More unacceptable if true, from Heritage — “Even the Fakery is Fake: Joint Committee is Not Required to Recommend $1.5 Trillion in Deficit Reduction”

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