We’re not there yet but the contours of the budget deal that will raise the debt ceiling are coming into focus.
The White House has consistently sought three things in the deal:
–revenues to take pressure off of spending cuts
–not to be back in this debate until after 2012.
It’s looking like they’ll get one and three. Both are very important.
But so is two. As I and others have written from the beginning of this debacle, absent new revenues, we’ll end up with spending cuts carrying too much of the load. And that looks to be where we’re headed.
As I understand it, the first tranche of cuts—about $1 trillion in discretionary spending—occurs soon after passage.
Then, by the end of this year, a committee of 6 R’s and 6 D’s comes up with a proposal for about $2 trillion in round two cuts. If the committee fails to do so, or Congress fails to enact, then an across-the-board spending-cut-only trigger takes over.
Especially after the first round of cuts went exclusively at discretionary programs, this means round two will go hard after entitlements.
That sounds a lot like what Speaker Boehner proposed last week. Here’s what my CBPP colleague Bob Greenstein had to say about that proposal :
- The first round of cuts under the Boehner plan would hit discretionary programs hard through austere discretionary caps that Congress will struggle to meet; discretionary cuts thus will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions. As Speaker Boehner’s documents make clear, virtually all of the $1.8 trillion would need to come from cuts in entitlement programs. (Cuts in entitlement spending totaling more than $1.5 trillion would produce sufficient interest savings to achieve $1.8 trillion in total savings.)
- To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties…have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.
If it’s true that the trigger in the deal is spending-only, no revenues, then the American people are about to end up with a very tough deal indeed.
I’m already hearing a lot of blame cast toward the President as per this outcome. I’ll speak to that later—right now I have to go weed the back yard in 97 degree heat, which I actually find way preferable to dealing with the debt ceiling.
But for now, let me say this: it is not the President who brought us to this spot. It is the actions of a group of far-right conservatives who were and are ready to push America into default for the first time in our history. Their actions would force the gov’t into prioritizing payments and sharply increase the likelihood of our already frail economy becoming even worse.
President Obama would not go there. We may have honest disagreements about that choice, but it’s a choice the President was not willing to make, and that has made all the difference.