A $2.4 trillion increase in the national debt ceiling, $917 billion in spending “cuts,” and creation of a special congressional committee to look for another $1.5 trillion in “cuts.”
That’s what Congress handed President Barack Obama after the Senate on Aug. 2 voted to raise the debt ceiling, one day after the House of Representatives had done the same.
Obama signed the agreement into law shortly after receiving it, then held a press conference in which he called for higher taxes on high-income earners and corporations, and more spending on a range of items from unemployment benefits to infrastructure.
All Sides Slam Deal
Apparently it’s a deal almost no one likes—including the legislative leaders who crafted it.
“Everybody had to give something up. People on the right are upset. People on the left are upset. People in the middle are upset,” Senate Majority Leader Harry Reid (D-NV) told reporters after the deal was reached.
In an address on the Senate floor, Reid said, “The agreement protects the long-term health of our economy. And it establishes a committee that will look at every option for reducing future spending—no matter how painful to either party.”
Dems Say Tax Hikes Possible
Republicans who backed the bill proclaimed it a victory because there would be no tax increases in shrinking the debt. Yet in an appearance on MSNBC, Democrat Senator Kent Conrad of North Dakota declared, “”We’ve had our lawyers go over this very carefully. It is really very clear that [new] revenue can be part of any solution that the special committee develops.”
The vote in the House was 269-161. Ninety-five of the “no” votes came from Democrats, many of whom wanted an explicit push for more taxes. Many of the 66 House Republicans who voted against the bill complained it cuts too little spending. In actuality it cuts none at all, as the “cuts” are really slight slowdowns in projected future spending increases.
The national debt is projected to climb another $7 trillion over 10 years because of the projected spending increases.
‘Nothing to Address Drivers of Debt’
On the Senate side, the vote was 74-26. In an Aug. 3 Washington Post column explaining his vote against the measure, Republican Senator Tom Coburn of Oklahoma wrote, “I voted against this agreement because it does nothing to address the real drivers of our debt. It eliminates no program, consolidates no duplicative programs, cuts no tax earmarks and reforms no entitlement program. The specter of default or a credit downgrade will still hang over our economy after this deal becomes law.”
Coburn added, “Politicians on both sides are misleading the country by calling a slowdown in the growth rate of new spending a ‘cut.'”
Steve Stanek ([email protected]) is a research fellow at The Heartland Institute and managing editor of Finance, Insurance & Real Estate Policy News.