Tuesday, August 02, 2011

No need to panic. Yet.

Reading my Twitter feed this weekend had me thinking the looming debt deal was a blunder and capitulation of historical and tragic proportions.

My reading of the actual deal, however, makes me more optimistic, or at least not nearly so discouraged as many of my Progressive bretheran and sisters.

First, there are no real cuts in the deal. True, about $1 trillion or so is scheduled to be lopped off the budget over the next ten years, but as I understand it, none of that will take effect in this fiscal year (FY 2011) and only $25 bill will take effect in the next FY, starting in October.

Second, the debt limit gets increased into 2013. Republicans wanted a shorter extension. They did apparently enact the McConnell scheme to allow the phony "repudiation" votes to take place in which the teabaggers can vote against a scheduled increase a few months from now, but if the House vote fails to gather a two-thirds vote, the debt limit increase will continue. This is supposed to be a real scary and threatening vote for Democrats who want to support the President. But it seems like BS to me. The debt limit has been increased into 2013. That's the deal. The rest is kabuki.

Third, future cuts, if they take place at all, will either need to survive a separate vote, or will involve significant cuts in the defense budget. Most Progressives don't seem to think much of this "trigger". But to avoid the trigger will require the passing of legislation, agree to by a sizeable number of Democrats to make very painful cuts in social spending. Or the Republicans will need to pass separate legislation somehow sparing the Pentagon from the cuts agreed to in this bill. The default, no pun intended, option is to do nothing. And the do-nothing option of allowing Pentagon cuts to go through, would be better for Progressives. Conservatives can override this, but it won't be nearly as easy as simply holding the debt limit hostage and risking default. Inaction this time won't be on their side.

Finally, to reiterate previous points, there's nothing in this bill that can't be undone by future Congresses. The only sure element in the bill is the debt limit increase.

The real battles lie ahead with the "trigger" and the expiration of the Bush tax cuts. A tax deal as a part of the compromise might have generated far less revenue then the expiration of the Bush tax cuts will. Again, Progressives aren't confident the Bush tax cuts will be allowed to expire. I'm not so sure. The onus will be on Conservatives to pass a bill extending them, while having to explain the tax cuts impact on the debt they've just been complaining about, or they will need to agree to a tax reform bill of some kind to replace them. And if they can't do that, and nothing gets done, the tax cuts expire.

Conservatives have a harder road ahead, as hard as that may be to believe.

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