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Here’s a helpful picture of the spending cuts in the debt deal that have many Democrats up in arms.
The bars in the graph don't exactly look like spending cuts worthy of the hysteria that has overtaken some quarters of Washington.
Chris Edwards at the Cato Institute created the graph based on the CBO score of the debt ceiling bill that passed the House last night.
Edwards provides this commentary:
The “cuts” in the deal are only cuts from the CBO “baseline,” which is a Washington construct of ever-rising spending. And even these “cuts” from the baseline include $156 billion of interest savings, which are imaginary because the underlying cuts are imaginary.
No program or agency terminations are identified in the deal. None of the vast armada of federal subsidies are targeted for elimination. Old folks will continue to gorge themselves on inflated benefits paid for by young families and future generations. None of Senator Tom Coburn’s or Senator Rand Paul’s specific cuts were included.
Will Wilkinson observes that what we have here is a pretty good picture of democracy in action.
Paul Krugman is flipping his wig over this hand-waving, non-binding promise to mildly decrease the future rate of spending growth. Not only will the debt-ceiling deal retard growth, Mr Krugman argues, but "by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status." Where Mr Krugman sees "raw extortion" tending toward "banana-republic status" I see "democracy"…
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.
Many commentators have been opining about who will benefit politically from the deal or get blamed if the deal is perceived to hurt the economy.
One element most have ignored, though, is this boring but important notion of baseline budgeting, and how much the public will grasp it. When most people hear "cuts," they think "spending less on something than we are now." What we really have is "spending less than we would have had we not made these cuts."
At some point, it will become clear that what we have are:
(1) cuts in the rate of spending, not actual program cuts in the way most people understand them; and
(2) cuts that are minimal up front and heavier down the road, which means a future Congress can change them (e.g., the deal only cuts $22 billion next year, or less than 1% of the budget, and pushes out bigger cuts to later in the decade).
It's still a good deal in the sense it's the best we could hope for in the current environment. But given that 66 Republicans voted against it because it didn't go far enough, the public will hear plenty about what the bill does and doesn't do. And one thing it doesn't do is implement structural change into how Washington spends money in the long run, which most Americans rightly perceive as a threat to our future way of life.
Independents have grown more conservative since Obama became President, according to Gallup yesterday. They have tracked with Republicans on spending more than they have Democrats.
What this likely means is that as (if) public discontent grows with the debt deal (assuming the deal passes the Senate and is signed into law), Republicans can make November 2012 look a lot like November 2010 by focusing on spending.
The Democrats, whose hysteria over the “drastic” nature of the current deal, look bad in almost every scenario when spending becomes the main topic.
We really need to be focusing on jobs and growth, but as the full effects of the debt deal are felt by the public, we may be in for a year when Tea Party 2.0 kicks into gear and makes spending the central topic once again.
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