The latest news is that there is a debt ceiling compromise in the works; that it took until the last minute is hardly surprising, given that so many negotiations — think the NFL labor agreement, and most union contracts here, as well as the six hour government shutdown last spring — don’t get made until there is a deadline looming.
The deal they were discussing, this person said, resembled the bill that Mr. Boehner won approval for in the House on Friday more than it did the one that Mr. Reid had proposed.
It would immediately raise the debt ceiling by about $1 trillion, accompanied by a similar range of spending cuts, and set up a new bipartisan committee that would work to find deeper cuts in exchange for a second debt limit increase that would extend through the 2012 election.
A failure of the new committee to win enactment of its proposal could then set off automatic spending cuts across the board, including to entitlement programs. Other ideas were swirling around the Capitol as lawmakers searched for a way to avoid default. One of Mr. Reid’s top lieutenants said he saw at least a glimmer of hope.
Late on Saturday, Reuters laid out these elements of a possible deal:
- $2.8 trillion deal. It would raise the debt ceiling by that amount through 2012 and make equal spending cuts.
- $1 trillion in cuts would be agreed now.
- Special committee appointed by Congress would recommend a second installment of savings of about $1.8 trillion.
- If Congress cannot agree on how to implement the cuts recommended by the committee, automatic cuts would be triggered, including reductions in military spending and cost savings to the Medicare health care program for the elderly. Benefit cuts would not be triggered though.
- No cuts in Social Security.
It was unclear whether tax increases could contribute to the additional budget savings under the trigger.
These are supposedly ten-year numbers. With a $2.8 trillion increase in the debt ceiling, and spending cuts of $2.8 trillion over ten years, even without the experts giving us a more detailed analysis it becomes very obvious: we’ll be hitting the raised debt ceiling again in just a few years.
The $1 trillion in spending cuts gets made quickly. Right. Well, if that happens, we’re looking at a $3.8 trillion cushion in the debt ceiling; that’s going to take what, three years to reach?
It was only last spring that the Congress wrestled mightily with budget cuts, after the completely Democrat-controlled eleventy-first Congress failed to do its job and pass an overall budget or most of the annual appropriations bills required to fund government operations. $100 billion in cuts became $61 billion in cuts to the severe $38 billion in cuts which actually meant just $352 million in actual deficit reduction. If after all of that effort, and a looming government shutdown — the government actually did run out of money for about six hours — even the Republicans by themselves could propose only $61 billion in cuts, before they started negotiating with the Democrats, how can anybody stand there, and say that the Congress will cut $1 trillion, “now,” from government spending, with a straight face?
Let me be very clear about this: if the President or the leaders of the Congress stand up there and tell you that, as msn.com, quoting Reuters, put it, “$1 trillion in cuts would be agreed now,” unless those cuts are already agreed to and are part of this purported deal, they are lying to you!
In agreeing to an increase in the debt ceiling, the Republicans have just thrown away their last bit of leverage. They have surrendered to the traditional establishment logic that not increasing the debt ceiling would be bad, bad, bad! and that we simply must borrow and spend more money. They have also bowed to the conventional wisdom that not raising the debt ceiling would hurt the GOP politically, even though it seems to be hurting President Obama.
Rather, the Republican leadership — assuming that the reports are accurate — has decided that they will avoid negative publicity (not that it will work), and stake their bets on the 2012 elections winning Republican control of the Senate and the White House. And maybe that will work, because President Obama is unpopular with a majority right now, his job performance ratings are continuing to decline, and the Democrats have to defend 26 seats in the Senate next year, compared to only ten for the GOP.
But it also risks losing grassroots support from the TEA Party, from the very people who rose up and gave the Republicans the House majority and six additional Senate seats in the 2010 elections. They won’t vote for the Democrats, but they might just get so thoroughly disgusted that they stay at home next election day.
So, in answer to the title question, if the initial reports are true, and the framework of the supposed deal is as reported, it was Speaker of the House John Boehner and the Republican leadership who blinked.
Cross posted on Common Sense Political Thought