Debt Deal Just A Bad Deal
Gary
Gerard, dumbhoosier.com
Congratulations, Americans! Y’all just got
played.
I am referring, of course, to the debt limit
deal we just witnessed being passed this week by
our esteemed leaders in Congress.
The deal is a joke.
No, actually, it’s worse than a joke because a joke
would be funny. The debt limit deal is anything but
funny.
The “deal” raised the debt ceiling by $2.4 trillion,
thus averting heading the nation down the path to
default on its fiduciary obligations and certain
economic turmoil – a necessary evil.
The deal cuts spending by more than $900 billion and
establishes a joint congressional committee to come up
with an additional $1.5 trillion in deficit savings by
Thanksgiving.
If the committee can’t reach an agreement or Congress
blocks it, $1.2 trillion in cuts in domestic and
defense spending will go into effect automatically.
Wow, that’s really a lot of spending cuts, eh? Not
really. Lots of sources tend to leave out the pesky
little phrase, “over 10 years.”
Yeah, that’s right, the cuts come over 10 years.
Meanwhile, the part of the deal that juiced up the
debt ceiling by $2.4 trillion? Yeah, well, that part
is over the next 18 months.
So how much debt reduction is going on during the next
18 months as the government bores through that $2.4
trillion? Maybe $50 billion. Probably not that much,
given the way the government keeps its books, but
maybe $50 billion.
So let’s remove some zeroes here and put this in
perspective. It would be akin to running up $24,000 on
your credit card over the next 18 months while cutting
$500 out of your spending.
And even after the committee meets and they cut more,
or the automatic cuts kick in, the spending still far
outstrips revenue as far as the eye can see. We will
need to raise the debt ceiling again and again.
It’s lunacy. It’s asinine. It’s absurd.
Meanwhile, our leaders are hailing this as a shining
example of “compromise” and “bipartisanship.”
Certain groups are claiming victory and saying, “Boy
did we show them!”
It’s almost too much to take. The whole thing is
maddening, because look what all the wrangling got us.
Way back in April, President Obama floated a plan. I
know, I know. Everybody says he didn’t have a plan.
Well, he did, actually.
Now, before we go any further, there is plenty I don’t
like about President Obama. Obamacare, the Wall Street
bailout stuff, the government overreach, the excessive
regulation, the seemingly anti-business posture he
takes lots of times. His general big government
philosophy. I could go on, but I just want people to
realize, by and large, I am not a fan of Obama or his
politics.
But he had a plan back in April with regard to the
deficit going forward. This, of course, was before
Congress turned the generally perfunctory task of
raising the debt limit into a matter of federal fiscal
life and death. Now, one could argue that perhaps
raising the debt limit shouldn’t be routine. But
historically and repeatedly, under the
leadership of both parties, it has been.
Obama’s plan was to achieve $4 trillion in deficit
reduction over 12 years or less, borrowing
recommendations from a bipartisan fiscal commission.
The White House said the approach would shave deficits
as a share of the U.S. economy to 2.5 percent of GDP
in 2015 and put them on a path to reach close to 2
percent by the end of this decade.
He also proposed a “debt fail-safe” to trigger
spending reductions if the ratio of debt to GDP is not
stabilized by the end of the decade and said deficit
trimming should be phased in over time to protect the
recovery.
Obama said every sector of government spending would
be on the table – including the social programs
Democrats love. He also said all programs would be
reviewed for wasteful spending.
As for taxes, Obama wanted to close loopholes and
produce a tax system that is simpler, fairer and not
rigged in favor of those who can game it.
He wanted to reduce tax expenditures enough to both
lower rates and lower the deficit.
OK, so that would have been $2 trillion in spending
reductions, $1 trillion from lower interest payments
and $1 trillion in tax reform over 12 years.
Now, can somebody explain to me how what we got this
week is so much better that that?
Because I’m not seeing it.
I know there was this aversion to the revenue side. No
messing with taxes during a recession. But a solid
majority – more than 60 percent – of Americans believe
the deficit problem has to be solved by a blend of
budget cuts and revenue increases.
Remember the Obama health-care debate? Weren’t we told
over and over it was being shoved down our
throats? That the majority of Americans – about that
same 60-plus percent – were against it? That the will
of the people was being ignored?
So how is it a travesty to ignore the will of the
people on health care but OK to ignore the will of the
people on tax reform?
We were told you can’t raise taxes on “job creators.”
Does that mean companies like GE? Because GE paid no
corporate taxes in 2010 and cut a crapload of jobs.
I don’t advocate raising the tax rates of a bunch of
struggling small businesses. Small businesses are the
job creators. It is those businesses that will add
jobs – and taxpayers and revenue – and slowly get us
out of the fiscal mess our government has put us in
over the past two administrations.
And I don’t advocate anymore “stimulus.” I don’t think
government creates jobs.
But I do advocate reforming the tax code to eliminate
loopholes that allow corporations like GE and Exxon to
avoid paying any corporate income tax at all.
I advocate rolling back regulations that restrain
businesses from growing.
And I advocate severely limiting the size and scope of
government.
But we got none of that.
Instead, we got demagoguery, finger pointing, name
calling and fruitless political drama.
And we wind up a with a deal on the debt limit and
budget cuts that’s just no good for anybody.
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