Wednesday, August 03, 2011

On Not Binding Future Executives and Congresses

Former Treasury Secretary Lawrence Summers on the recently concluded debt deal:

Despite claims of spending reductions in the range of $1 trillion, the agreements reached so far are likely to have little impact on actual spending over the next decade. The deal confirms the very low levels of spending already negotiated for 2011 and 2012 and caps 2013 spending about where most would have expected this Congress to end up. Beyond that, outcomes are anyone’s guess — Congress votes on discretionary spending annually, and the current Congress cannot effectively constrain future actions. True, there are caps and sequester threats in the debt deal, but these are virtually certain to be reformulated in 2013; in other words, the fact remains that discretionary spending going forward will largely reflect the will of future Congresses.

Will Wilkinson (h/t Andrew Sullivan) also writes:

Maybe Washington's game of debt-ceiling chicken went on too long for comfort, but the resolution of the game looks a lot like a pragmatic compromise to me. Unless the bill fails, which it might, it looks like our democracy will have raised the debt ceiling, didn't really cut a thing, passed off responsibility for substantial deficit reduction to a "super committee", which will either come up with a plan that does not bind the future executive and legislature or will trip a "trigger" that won't go into effect until after the next election, and then, again, will go into effect only if the government of the future wants it to go into effect. If this is what "raw extortion" delivers, it's not very much.

I realize most of our Media Villagers apparently don't understand the political process and are busy breathlessly proclaiming the triumph of teabaggerism on the debt, but for all the fire and fury the past few weeks, nothing really much happened here.

The fact that the supposed long term cuts amount to less than that proposed by other policymakers in town has also attracted some attention:

The problem with the plan is that it’s just a step forward; it isn’t a solution. It leaves more than half of its work — finding at least $1.2 trillion in savings to avert an automatic set of cuts — to a new bipartisan Congressional committee. Even if that committee is successful, more tough work will be necessary to avoid, a few years down the road, another crisis over the deficit.

This country needs a plan to reduce our deficits by no less than $4 trillion in the next decade. It needs a plan to cut more wasteful spending in the defense and nondefense budgets than this deal does. In addition, we must address the unsustainable growth of our entitlement programs and reform the tax code to make it more competitive and more efficient.

Even if fully implemented, the debt deal's 10-year budget cuts would amount to only $2.1 trillion, which is far less than the $4 trillion proposed by Obama's own deficit commission, chaired by Bowles and Simpson.

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