The House of Representatives voted minutes ago to approve debt ceiling deal reached on Sunday and the Senate plans to vote tomorrow. But many details are not yet known. And of those that are, there is a difference of opinion on the effect or restrictions from some details. (For example, Republicans seem to think the formation of a 12-member committee will be a mechanism to forestall tax increases, while Democrats disagree.) My opinion of what is known so far:
NOT GOOD – Extending the debt ceiling for over a year.
In his July 25 speech, President Obama made a smart choice to talk about past decisions of the opposing party. He essentially said This is not just an issue for Democrats. Ronald Reagan raised the debt ceiling 18 times, so why not do it now? But that argument also undermined Mr. Obama’s argument that we must extend the increase to the end of 2012. Those 18 increases in the debt limit during the Reagan era occurred over 8 years – an average of every 5.3 months.
This long of a time frame sets a bad precedent.
NOT GOOD – Nowhere near enough spending cuts.
Even if the full $2.5 trillion in cuts actually happen, they are spread over 10 years. That comes to $684 million ($684,931,506.85) per day over the next 10 years. That sounds good except that the US currently borrows $3.5 billion each day. As long as the government continues to borrow more than it cuts, the deficit continues to increase.
(Estimates are that the deficit will increase $420-500 billion in the 120 days before the 12-member special committee presents its recommendations.)
NOT GOOD – If the special committee does not come up with a plan, half of the triggered cuts would come from defense spending and half from entitlements.
There are literally thousands of areas where cuts could be made. Putting all the burden on our soldiers, sailors, seniors and the poor seems pretty heartless. And since no one in Congress could get re-elected after being that heartless, somehow they will have to get around that provision.
A better plan would have been mandatory cuts of a certain percentage across the board.
GOOD – Some attempt at truth in the numbers.
Expiring tax breaks will not be counted as cuts or savings. (For example, when the Bush era tax cuts expire next year and the fix to the Alternative Minimum Tax expires, the extra revenue will not be considered savings.)
On the down side, if the AMT is not “fixed” again or eliminated, thousands of middle class Americans will pay more income tax – after filling out a complicated 2 page form.
GOOD – A requirement that both houses of Congress vote on a balanced budget amendment.
Let the American people make their feelings known to their representatives and hopefully Congress will vote according to the will of the people. Whatever the result, this is the way democracy should work. It hurts our political process when Congressional leaders try to suppress legislation.
NOT SURE – The 12-member special committee.
The process is probably too cumbersome for debate on each detail in each house of Congress. But it is also problematic that only 12 out of over 500 members of Congress have the power to make these decisions. The Founding Fathers set up our system so that power would be distributed across the population. I’m not sure they would approve of this way of doing government business.