Monday, August 1, 2011

The Deal No One Seems to Like, But Most Still Wanted

With passage by a comfortable margin in the House (and all but certain 60+ votes in the Senate), it appears the country has averted a major financial crisis, at least temporarily.

The fact that disparate voices such as Maxine Waters on the left and Michelle Bachmann, from the right,  both strenuously opposed the bill may be affirmation enough to support it. (In fact, I do support the bill and if I were a member of the Congress, in my view,  the only responsible approach would have been to vote "yes".)

All that said, there are major questions. The CBO estimate for projected savings from deficit reduction over 10 years comes in a bit below what Boehner has advertised Specifically, the particular line items for the first round of $1 trillion cuts in discretionary savings is sketchy at best. The likelihood that the bi-partisan group of Congress members empaneled to find an additional $1.8 trillion in savings over 10 years will actually get it done seems unlikely; instead, the probable outcome is that it will revert to the automatic cuts scenario, which I understand expressly excludes Social Security and Medicare. So where exactly is the money coming to come from? Defense spending for sure, but where specifically? And cuts in defense spending alone don't come to close to getting us where we need to be.

One additional thought as well: The lifting of the debt ceiling to provide the additional 2.2 trillion takes us past the 2012 election and into 2013. The general cuts in the neighborhood of call it 2 to 2.8 trillion are over the next ten years. How, then,  is it that we get a dollar spending reduction for each dollar increase in the debt ceiling? That was the Republican idea, I thought.  Shouldn't the dates at least roughly correspond? All this looks like fuzzy math to me.

In the end, it really is the deal no one seems to like, but most still wanted.  It had to be done to calm the markets and show the world that Washington can actually get something done. Spending is out of control and it has been for a long time.  But passage of this bill is a step in the right direction, but only a very small step.  It will be a very long and perilous road ahead.


Post a Comment

Twitter Delicious Facebook Digg Stumbleupon Favorites More

Powered by Blogger