Debt Ceiling Deal and Spin
The Debt Ceiling Deal
On August 2, 2011, President Barack Obama signed the Budget Control Act, hours after the Senate approved the bill. The bill will raise the debt ceiling by as much as $2.4 trillion. The bill does not cut spending – it will continue to increase, but will cut future spending increases. The bill will (hopefully) cut $900 billion of $7-8 trillion in projected deficit spending increases over the next 10 years. It also establishes a 12-member super-committee of Congress charged with finding an additional $1.5 trillion in savings. If that committee fails, the “trigger” that cuts $1.2 trillion ($600 billion from the military budget and domestic programs budget) is enacted.
Said President Obama of the bill, “a compromise to reduce the deficit and avert a default that would have devastated our economy.” The “devastation” Obama spoke of is a government that must operate on a balanced budget. Obama said after the Senate passes the bill that he didn’t really want the government to move toward a balanced budget. He said that it constituted “an important first step to insuring that as a nation we live within our means, yet it also allows us to keep making key investments in things like education and research that lead to new jobs and assures that we are not cutting too abruptly while the economy is still fragile.”
Democrats will use their buddies in the MSM to portray the Republicans as evil. Republicans will be portrayed as uncooperative. The MSM says that a deal will be the ultimate measure of success, suggesting that the public can now expect harmony in our government, smooth and cooperative functioning to get things done.
Many major national newspapers are playing the same tune on Tuesday as they worry about how the spending “cuts” in the debt-ceiling deal will harm the economy. From the Washington Post, we learn that the deal will avert a financial crisis, but also threaten to aggravate the problems facing the U.S. economy, including high unemployment and weak demand. The deal will lift the cloud of uncertainty over the economy. The deal could help free the nation from what is becoming a crushing national debt. The deal could endanger the anemic economic recovery. From the Wall Street Journal, we learn that the deal will cause a mild drag on U.S. economic growth in the coming year, coming at a time when the recovery remains fragile. From the Los Angeles Times, The plan will be a tough sell if the economy stalls, because reduced government spending can further slow growth. “There is nothing in these new plans to generate strong growth,” says Nigel Gault, chief economist at IHS Global Insight. “In fact, they could weaken growth,” resulting in lower tax revenues and making the deficit worse.
The Republicans will mislead you by celebrating a victory. Months ago president Obama demanded a “clean” bill that would increase in the debt ceiling, meaning without any conditions that required spending cuts. But Republicans refused to budge. They will frame a debt-ceiling agreement as largely giving them what they wanted in a debt deal. Said Senate Minority Leader Mitch McConnell (R-Ky.) on Sunday on CBS’ Face The Nation (before the deal was finalized), “I don’t think we’ve been hurt at all. The American people wanted us to do something about out-of-control spending and … the debt ceiling is going to produce what many people would believe is a complete change in the trajectory of the federal government beginning to get spending under control.”
Said Sen. Lindsey Graham (R-S.C.) on ABC’s This Week, Republicans could declare victory given the fact that no new tax increases will be included in the deal. “From the Republican Party’s point of view, I think we can declare victory in a limited fashion. This is the first time in my lifetime that I know of that we’re paying for future debt increases dollar for dollar, and that would not have happened without the 2010 election.”
Senate Democratic Policy Committee Chairman Charles Schumer (D-N.Y.) said Sunday on Face the Nation, “Democrats have shown throughout this debate a willingness to compromise. There are people on the left who would probably say ‘no cuts,’ but they haven’t been able to have their way within our caucuses, whereas this hard right group seems to get its way all the time.”
The White House is basing this deal on the premise that they will stand firm next time on the exact same economic and political points that they were not able to stand firm on this time. Said Sen. Kirsten E. Gillibrand (D-N.Y.) siding with liberals who focused on the cuts to programs and lack of additional tax revenue to soften the blow, “I do not believe this proposal is a fair, well thought out, or balanced deal for our fragile economy or the millions of middle-class families struggling to make ends meet.” Mrs. Gillibrand, explaining her “no” vote, complained that the deal was reached behind closed doors and that it “reduces the deficit mainly on the backs of middle class families that will see the impact of reduced federal spending.”
From The Daily Kos,
The debt deal announced today is a victory for bipartisan compromise, for the economy and for the American people. The agreement:
- Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
- Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
- Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
- Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
- Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.
So, be aware of what the Debt Ceiling Deal is and that you are being spun. And the spin is going to continue for some time. And as Joseph C. Wilson, a former US diplomat best known for his 2002 trip to Niger to investigate allegations that Saddam Hussein was attempting to purchase yellowcake uranium, and husband of Valerie Plame, said, “The spin overwhelms the substance.”
But that’s just my opinion!.