Debt Deal Analyses - Crap Still Stinks - Opinions All Over the Place

Today in Washington, D.C. - August 1, 2011:
Yesterday, Senate Majority Leader Harry Reid (D-NV) failed to get the 60 votes needed for cloture on his proposal to raise the debt ceiling by a vote of 50-49. His bill was also defeated by the House on Saturday.

As a result, Obama was forced to negotiate with House Republicans. As reported last night Republicans, Democrats and President Reach Agreement On Raising Debt Ceiling. The Congressional Budget Office confirmed today that the debt-reduction deal struck by the White House and congressional leaders would cut deficits by at least $2.1 trillion over the next 10 years.

Constituents of both parties are objecting to the new "crappy" plan. However, the plan is expected to garner enough from the center of Congress to pass. As identified below, some are stating the the TEA Party achieved victory, it doesn't seem that most "TEA Party" and identified TEA Party associated members in Congress are not pleased with not getting "present day spending cuts" or the Balanced Budget Amendment with this deal. Liberal members of Congress are upset with not having immediate tax increases.

Many are focusing on how far the debate has shifted.

Back in May, Austan Goolsebee, then President Obama’s top economic advisor, called the idea that spending cuts and deficit reduction had to be tied to raising the debt ceiling, “quite insane.” At the same time, the White House was calling for a “clean” debt limit increase. And Senate Democrats were alternately demanding tax hikes or more stimulus spending as part of any legislation.

Yet the agreement that was reached yesterday eschews all of those things and requires spending cuts of at least $2.1 trillion dollars, sets up votes on a balanced budget amendment, and sets up a joint committee of Congress to consider further cuts and entitlement reforms. Not only that, as Marc Thiessen writes in his Washington Post column today, “The package sets an important new precedent that debt-limit increases must be ‘paid for’ with commensurate cuts in spending.”

>Washington Post reporters claimed that this was a victory for conservative Republicans over President Obama’s preferred approach. A story on the deal noted Obama “failed to secure other top priorities, including fresh measures to revive the flagging recovery and an end to tax breaks for corporations and the wealthy.” It also pointed out, “Republicans, by contrast, won severe cuts to agency budgets over the next decade and the prospect of deeper cuts to come, delivering on the campaign promises that helped them gain control of the House in the fall congressional elections. . . . Liberals were not enthusiastic about the package, arguing that it represents surrender on all their top priorities, including pledges to protect Medicare and to end tax breaks for the rich.”

Meanwhile, an analysis piece in The Post argues, “It was President Obama’s bottom line, a position he repeated in every recent public utterance on his debt-ceiling talks with Congress: Any deal must be ‘balanced’ with spending cuts and tax increases. But in his eleventh-hour stare-down with tea party-infused Republicans, with a possible government default on the line, Obama blinked. The deal to trim the federal deficit by more than $2 trillion and increase the government’s borrowing limit contains no guarantee that tax increases will be part of the equation. After weeks of presidential demands for sacrifice by corporate jet owners and hedge-fund managers, those taxpayers and others can rest easy — at least for now. Liberals were furious as the terms of the agreement came into focus Sunday, and yet another capitulation by Obama on economic policy threatened to further dampen enthusiasm among the core Democratic voters he will need to win reelection next year. . . . One senior Senate Democratic aide said that averting a default was a victory of sorts for Obama, ‘but when you look at the emerging details, spending cuts and triggers with no revenue, the president got rolled.’ Asked if the deal was balanced, as the president had required, former Obama White House economic adviser Jared Bernstein said, ‘Not by any stretch of the imagination.’”

The Wall Street Journal editors call the deal, “a victory for the cause of smaller government, arguably the biggest since welfare reform in 1996.” They note, “Most bipartisan budget deals trade tax increases that are immediate for spending cuts that turn out to be fictional. This one includes no immediate tax increases, despite President Obama's demand as recently as last Monday.” They add, “This is no small achievement considering that Republicans control neither the Senate nor the White House, and it underscores how much the GOP victory in November has reshaped the U.S. fiscal debate. No wonder liberals are howling. They have come to believe in the upward spending ratchet, under which all spending increases are permanent. Not any more.”

Importantly, Thiessen emphasizes, “The reported debt-limit deal appears to be a victory for the Tea Party. . . . To appreciate the scope of the Tea Party’s victory, consider: When Barack Obama came into office, he went on a bender of government spending. He signed an unprecedented $821 billion stimulus spending bill. His first budget increased federal spending to 27 percent of gross domestic product — the highest level as a share of the economy since World War II.  He then proceeded to ram through Congress Obamacare, a massive government intervention that adds $1.4 trillion in new spending over the next decade alone. Democrats openly talked about passing a “second stimulus.” And five months ago Obama submitted a budget to Congress that tripled the national debt, raising it by $10 trillion over the next 10 years. Today, no one is talking about tripling the national debt or passing a ‘second stimulus.’  Congress is about to cut spending by about $2 trillion and put us on a trajectory to balance the budget within a decade. Senate Majority Leader Harry Reid complained Saturday evening that Congress has raised the debt limit 74 times since 1962 without conditions.  He is right. This is happening for the first time in history, thanks to the Tea Party.”

The WSJ editors also focus on the big picture here, writing, “The tea partiers pride themselves on adhering to the Constitution, which was intended to make political change difficult. Yet in this deal they've forced both parties to make the biggest spending cuts in 15 years, with more cuts likely next year.” And even The Washington Post’s Chris Cillizza names the Tea Party one of the “winners” in this deal.

As Thiessen writes, “Tea Partyers should recognize just how much Obama and the Democrats caved: $2 trillion in spending cuts. No tax increases. A new precedent that debt-limit hikes must be accompanied by equal or greater cuts in spending. And the potential for a balanced budget in 10 years. That the Tea Party accomplished all this in just six months — at a time when the GOP controls one-half of one-third of the federal government — is remarkable.”

Freedom Action supports enactment of the bi-partisan debt ceiling deal reached over the weekend by identifying it as a "first stop." Myron Ebell, Director of Freedom Action said, “The bi-partisan debt ceiling compromise is a modest first step in what will be a long struggle to restore solvency and put the American economy back on a track of robust long-term growth. Speaker John Boehner and House Republicans can take credit for achieving much larger spending cuts against the determined opposition of President Obama and Senate Majority Leader Reid than seemed possible even a few days ago.  The next step that the Congress must take to restart our economy is regulatory relief and reform. The Obama Administration is doing everything it can by using existing legal authority to regulate investment and jobs out of the economy. The Congress must put a stop to the Obama Administration’s job-killing regulatory spree.”

Iain Murray, Vice President for Strategy, Competitive Enterprise Institute, in a National Review Editorial views the present plan as a victory for the following reason, "After Alexander and Montgomery turned back Rommel at the Battle of El Alamein in 1942, Churchill told his audience at the Mansion House, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” That, I think, is how we should view the debt-ceiling victory — for it is a victory. For the first time in many years we have stopped government’s remorseless advance. We must go on to win many more victories if we are to see government shrunk back to its rightful size, but the first victory is often the hardest to obtain. There are many more battles to fight. Our first job, it seems to me, is signaled by the desperate GDP and manufacturing numbers announced in the past few days, which have been obscured by the political news, but which are keenly observed by the markets. We have to get Americans back to work and the key to that is deregulation."

Grover Norquist, President of Americans for Tax Reform supports the plan. Norquist said, ""The deal proved that we can cut spending without trading away tax hikes." Norquist added, ""Obama's internal polling must scare the heck out of him. He caved on the key Republican demands: no tax hike, spending cuts equal to the debt ceiling increase."

However, the plan also has its opponents in the conservative think tanks.  Heritage Action an activist arm of The Heritage Foundation responded to the plan, "The deal would increase the debt ceiling by $900 billion now, in exchange for Washington-style cuts. It would also give tremendous power to a 12-member committee that will pave the way for tax hikes. Not only that, but if conservatives don’t agree to the tax hikes, then a so-called trigger would automatically cut our nation's security by $600 billion. That being said, conservatives should take heart that the Washington establishment is increasingly adopting our rhetoric. Those promoting this deal promise that it won't raise taxes. They promise that it cuts spending. And they promise that it can lead to a balanced budget for our country. Despite the fact that the policy of the deal does not support these promises, this is a sign that our message is winning."

Several Republican presidential candidates are opposing the plan. Rep Michele Bachmann had previously said regardless of the deal, she opposes raising the debt ceiling and run-away spending. Former Gov. Mitt Romney quickly responded today that he too opposed the plan.  But he offered no concrete reasons. Former Gov. Gary Johnson said, "This deal is kicking the can down the road." Rep Ron Paul who like Bachmann has been a consistent opponent, offered the following interesting statement, "In spite of the rhetoric being thrown around, the real debate is over how much government spending will increase. No plan under serious consideration cuts spending in the way you and I think about it.  Instead, the "cuts" being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases. This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda."

Sen Tom Coburn (R-OK), who is not running for re-election, said, "There are no cuts in the plan for present spending. It just cuts the rate of increase. The bill kicks the can down the road and will come back to hit everyone as early as next summer."

Bill Wilson, President of Americans For Limited Government, called the bill "The No Solution Deal" and said, "A late deal struck by House and Senate leaders to raise the debt ceiling — with spending cuts that won't balance the budget anytime soon, if ever — is a sad commentary on the state of affairs in Washington. Aside from the lack of spending cuts, an essential feature of any plan a family would follow to reinstate fiscal prudence, the other essential ingredient missing from the deal is a recipe to get the economy growing again. It will do nothing to reduce the exorbitant cost of doing business in America, with corporate taxes among the highest in the developed world. Where the federal regulatory overkill threatens to shut down millions of more jobs. And where the new costly healthcare entitlement, ObamaCare, threatens to topple the federal treasury once and for all."

---

Tags: debt ceiling, deal, Washington, D.C., US Senate, US House, crap, facts, politics To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!