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The Battle On Deficits and Debt: What Did We Accomplish?

The Tea Party largely drove the wave election of 2010.  And there were three topics, above all else, that were a focus of their candidates:  The repeal of Obamacare, the economy and unemployment, and restraining the Federal Government.

Let us admit, in the beginning, that we have made no progress on Obamacare, and the economy is a mess we cannot hope to clean up until we send Barack Obama into retirement.

But the one hope we as a movement had was to restrain federal spending.  By taking the majority in the House of Representatives, we controlled the power of the purse.

Initially, Republicans thought they could get a grand deal, which would encompass extension of the Bush tax cuts, the 2011 budget (which Democrats failed to pass), and the raising of the debt ceiling.  Guess what?  It was Democrats, led by Barack Obama, that didn’t want such a wholesale solution.  Instead, the President made it the piecemeal approach, which is exactly why we are in the position we have been in for the past several weeks.

So, what did we actually get, and lose, in the deal?  Well, you want to look at Speaker Boehner’s PowerPoint presentation, here it is.  But the key points…

  • The framework creates a 12-member Joint Committee (Super Committee) that is required to provide legislation by November 23, 2011 to cut the deficit by $1.5 Trillion over the next decade.   This bill must be voted on by the end of the year, without any amendments added on.
  • Across the board spending cuts apply to discretionary spending, Defense, and Medicare.  Social Security, Medicaid, Veterans Benefits and military pay are exempt.
  • As for the risk of the super committee coming back with tax cuts…doesn’t sound that likely.  James Pethokoukis has a nice piece on why baseline budgeting is actually going to help us out on this one.  The key point?  The CBO, using its somewhat arcane accounting measures, assumes the Bush tax cuts will expire at the end of 2012, because that is the law of the land at this moment.  Thus, it will already take into account $3.5 Trillion in supposed increased revenues.  To raise taxes over that amount, the committee would have to cut even more from the budget.  Democrats will never accept that level of cuts.  So tax increases are simply not going to be a part of the committee’s recommendations.
  • As for those huge budget cuts into defense…they may not be as bad as initially reported.  According to early reports, the total $800 Billion in cuts will include cuts from defense, foreign aid, homeland security, and other agencies involved with ‘defense-like activities’.   Real cuts to the Defense Department are more likely in the range of $400 Billion over the next decade…a large amount, to be sure, but the amount that Republicans had largely accepted as a reality long ago.
  • The House and the Senate must take a vote of the Balanced Budget Amendment to the Constitution no later than October 1, 2011.

Would I call this a victory?  I guess, in the slimmest definition of the word.  Republicans, controlling just over half of one branch of the legislature, were able to turn Barack Obama’s neverending spending spree, and bend the curve.  Slightly, admittedly, but still, as for rate of increase, there is no doubt Republicans were successful.

Were we successful in achieving any longterm success?  Doubtful, and I would say nonexistent.  Long term expenditures are wholly dependent on our entitlement programs and the Defense Department.  Defense was certainly cut, as it always is; however, if the above analysis is correct, and total ‘defense’ cuts include other agencies, the effects could be minimal.  But entitlement cuts are tokens so far, and nothing more.  Medicare spending is restricted, which is an achievement, but Medicaid and Social Security are not touched, and Obamacare was not mentioned as far as I can tell.  Nothing less than the Ryan plan would have put us on the course for long term fiscal stability, and that was not achieved.

As a political statement, I would not call this a victory in the least.  Republicans looked flummoxed, rudderless, and almost in a state of internal civil war during this process.  That is to be expected, without a Republican President to lead us, and a Speaker of the House that, despite his best efforts, is not uniformly trusted by his caucus.  The process was worse than watching sausage being made, to paraphrase Otto Von Bismarck.  And Republicans did not come out of the process looking like leaders.

We should go forward, telling our constituents that we did make progress, but we did not have victory.  Victory will come when we make the changes necessary to set our fiscal course to a glide path to deficit neutrality.  And that victory, it seems, will not come until we hold the White House, the Senate and the House of Representatives.  And even then, with Senate rules, it will be difficult (unless we take a page from our progressive friends, and use reconciliation; wouldn’t that be ironic?).

Of course, Democrats, especially the progressive wing in the House, could still scuttle this bill.  Economically that would be damaging; politically, Pelosi might as well hang the Democrat Donkey by a noose if she can’t rally her caucus.  But assuming that Obama forces their hand, and that things go as we expect, this deal is a win for us.  An imperfect deal, that achieved far less than we hoped…but still a win.  This is only the smallest of victories in a tiny battle in the long term war against federal spending and the debt.  Nothing more.  And we should portray it as such.

 

This has been cross posted on Neoavatara.

 

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